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Health & Wealth Update
Wed June 19, 2013
Boone Hospital and MU Health Care to lay off employees, cut others' hours
Thirty-five MU Health Care employees will see their hours reduced in the coming year. At Boone Hospital Center, seven employees’ hours will be cut, while 13 full- and part-time employees will lose their jobs.
In Boone Hospital’s case, the layoffs came in a system-wide package. The hospital’s parent company, St. Louis-based BJC Healthcare, recently announced it is cutting 160 jobs from its hospitals. This is the first time BJC has ever made system-wide layoffs. June Fowler, vice president for corporate and public communications at the company, said several factors led to the layoffs.
“BJC is experiencing reductions in our reimbursement for the healthcare services that we provide,” Fowler said. “We’ve also seen a decrease in inpatient hospitalizations.”
Those reimbursement reductions are in the form of the sequestration and Affordable Care Act cuts to the amount of money Medicare pays physicians. Hospitals are also being hit by the cuts to the federal money hospitals get for providing charity care to the uninsured. With those cuts and the lack of Medicaid expansion in Missouri, hospitals will get less money while still providing care to the uninsured population. Fowler said layoffs are not the only way BJC is trying to cut costs.
“We’ve also been working to reduce costs of supplies and services,” Fowler said. “And again, staff reductions were kind of the absolute last resort for us, and also very unusual for BJC.”
Despite that, BJC’s top administrators are making millions. The St. Louis Post-Dispatch reported in May that BJC’s president and CEO’s earnings increased from 2.3 million dollars in 2010 to 3.3 million in 2011.
Timothy McBride, a health economist and professor at Washington University in St. Louis, said hospitals that do not pay CEOs what they deem acceptable risk losing those CEOs. So, hospitals often target underutilized positions for layoffs to save money.
“From a health economics point of view, we would say these are the kinds of efficiencies the healthcare sector has not been doing for a long time anyway,” McBride said.
In addition to cutting hours, MU Health Care also said it would eliminate 90 open positions, some of which have been unfilled for the past year.
McBride, who chairs the Medicaid oversight committee in Missouri, said an expansion of the program would have likely helped prevent the layoffs.
Now – if big hospitals like MU Health Care and Boone Hospital are already cutting staff – what’s happening to Missouri’s rural hospitals? McBride also does a bit of research on rural hospitals. He says the blow of reduced revenue would be harder on these institutions, which already run on more narrow profit margins compared to their urban counterparts.
Missouri might see more rural hospitals go in the red. McBride said running hospitals in the red would reduce quality of care in rural hospitals. Some hospitals might have to stop providing specialized services, or refrain from buying equipment to replace their aging machines.
The Missouri House and Senate have created interim committees to study Medicaid reform in the state. The committees have not yet met.
Health & Wealth Update