Hospitals Begin Cutting Staff, Patient Services as Recession Continues

Previous attempts by U.S. hospitals to reduce expenses have not been enough, forcing some facilities to begin to cut services and staff in order to reduce expenses, according to a recent study by the American Hospital Association, the AP/Boston Globe reports. For the study, AHA between March 5 and March 27 sent surveys to all 4,946 community hospitals in the U.S. Of those, 1,078 hospitals, or 22%, responded.

According to the study, 22% of the hospitals that responded have reduced services since September 2008. Cuts to services included outpatient clinics, behavioral health programs, patient education programs and home health care following hospital discharge. Nine in 10 hospitals reported cutting expenses in the first quarter of 2009 and eight in 10 hospitals reported reducing administrative spending. The study also found that about half of the hospitals reduced their staff and that the number of hospitals that laid off 50 or more employees at one time increased. The survey also found that total employment at hospitals rose slightly in 2008, but that employment at hospitals grew by just 0.1% in January and February and was flat in March. In addition, hospitals have reduced employees' hours, delayed pay raises, reduced employee benefits, cut supply costs and sold assets, all in an attempt to reduce costs and increase revenue. Some hospitals also reported that they are considering merging with other facilities to reduce overhead costs.

Forty-three percent of hospitals said they expect to lose money in the first quarter of 2009, compared with 26% during the same period in 2008. In addition, about one in three hospitals reported a decline in the ratio of net profit to what they pay creditors. Hospitals also reported increased interest expenses, longer periods for insurers to pay their bills and more difficulty in obtaining loans. As a result, more than three-fourths of hospitals reported delaying, halting or scaling back on hospital improvement projects, including new buildings or upgrades and the implementation of health information technology (Johnson, AP/Boston Globe, 4/27).

The report is available online.