Publicly traded hospital systems are feeling the impact of rising unemployment in their communities, according to an analysis by Longbow Research.
The unemployment rates, more than 14 percent in some markets in the South, are driving up bad debt expenses and delaying medical procedures for the uninsured, said Longbow healthcare analyst David Bachman.
As a result, hospital executives are forced to be more selective in hiring, to outsource services to outpatient surgical centers and physician offices, and to abandon least profitable and unprofitable service lines, which further create selected layoffs.
Bachman gave the example of a Philadelphia hospital that got out of the obstetrics business because of competition in the local market. The hospital redirected staff and resources into other business lines, Bachman said, although in some cases, staff may be laid off.
With patients delaying elective procedures, hospitals may need to tighten their belts in areas such as orthopedics.
More transparency and the trend toward a more wired healthcare delivery system are reducing the duplication of tests, Bachman said, which is negatively impacting business lines like imaging and diagnostics.
The economic downturn has also decreased the rate of nurse turnover, as households depend more than ever on the second income generated by nurses. Hospitals benefit from this trend, as staff turnover is costly.
Another byproduct of the decreased nurse turnover rate is that temporary staff is bearing the brunt of job cuts and freezes, said Bachman. A Longbow Research survey of temporary staffing agencies reveals that nationwide employment of temporary nurses is down between 40 to 50 percent.
"A lot of hospitals relied on temporary nurses to relieve nurse shortages," Bachman said.
Despite the depressing data, Bachman said that overall healthcare employment through November 2008 was up 2.5 percent year over year.
"Relatively speaking, healthcare is still producing jobs, although the growth rate is slowing," he said.
One area that will require more staff and resources is the emergency department. Bachman said hospital executives would either hire more clinical staff or contract out to management services.
The push for increased quality of care and healthcare IT adoption will put more focus on clinical informatics, Bach predicted, which will create new opportunities for nurses and other clinical staff.
In the meantime, Bachman thinks hospital executives should respond to the rising unemployment in their communities by placing greater emphasis on training and IT solutions for front-end processes such as insurance verification and eligibility identification for state and federal government programs.