For a generation, hospital and nursing jobs were considered some of the safest in the economy, recessionproof.
Even during the latest downturn — the worst since the Great Depression — hospital employment remained relatively steady, particularly in Illinois. Between July 2008 and July 2012, as total employment in Illinois plunged by nearly 275,000 jobs, hospital employment remained virtually flat, state figures show.
Like millions of Americans over the past five years, hospital workers are facing the bitter economic reality that no job is safe.
Hospitals of all sizes, from large academic medical centers in big cities to small community hospitals in rural areas, have cut hundreds of jobs in Illinois over the past year, including positions in at least nine facilities in northern Illinois.
The job cuts, affecting everyone from maintenance workers and food service employees to lab technicians and nurses, are coming ahead of the implementation of the 2010 health care overhaul law and represent the beginning of a massive cost-cutting campaign being waged by hospitals across the country.
With fewer patients expected to come through the door, as well as lower payments, health systems are seeking budget cuts of between 20 and 40 percent within the next five years — cuts so deep that reductions in labor, the largest single item in a hospital's cost structure, will be required.
"This is happening all over the country, and the cuts you're seeing now are likely to be the first salvo in what's going to be a very significant reduction in force by hospitals nationwide," said Jamie Orlikoff, a Chicago-based health care consultant.
At least some of the job cuts include front-line health care workers like nurses, raising concerns that patient care may suffer. But hospitals say the cuts are a byproduct of efforts to improve quality through more coordinated care, keeping patients healthier and out of the hospital.
Some hospital workers aren't buying that argument, especially as some 30 million more Americans may gain insurance in 2014 as part of the Affordable Care Act.
Jan Rodolfo, Midwest director for National Nurses United, the country's largest union of registered nurses, said profitable hospitals are behaving much like hospitals in dire financial straits.
"Hospitals that are very profitable are still aggressively pursuing cost-cutting measures," she said. "I think they see an opportunity right now to drive down costs and use the economic climate as the justification."
The United States is in the midst of a decadelong nursing shortage, which means that more registered nurses are needed, not fewer, Rodolfo said. And while the health care overhaul law will bring both challenges and benefits for hospitals, "on balance I think (hospitals) will come out ahead," she said.
Many of the pressures hospitals face are independent of the health care law:
The growing popularity of high-deductible health insurance plans coupled with a high level of unemployment has led many to defer medical care, particularly at hospitals.
In Illinois, most hospitals also face a 3.5 percent across-the-board cut in state payments for Medicaid patients this fiscal year, as part of a package of bills pushed by Gov. Pat Quinn.
Millions of aging baby boomers are beginning to shift into Medicare, the government-run health care program for the elderly and disabled that pays hospitals lower rates than private insurers.
Enrollment in Medicare is expected to increase by nearly a third, to 64 million, by 2020, according to the 2012 annual report of Medicare's board of trustees.
Even without the other factors, that crush of new Medicare patients would severely strain hospital budgets without fundamental changes, primarily because most hospitals lose money on treating patients in the program, Orlikoff said.
Hospital staffing going under the knife
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