Health Care Providers Announce More Lay Offs due to Recession

The health care industry is one of the most reliable sectors even during the mid-2007 to 2009 recession, but not for this year as health care providers announced thousands of layoffs in September.

Health care providers had to close several hospitals and layoff about 8,128 jobs in September, according to the outplacement firm Challenger Gray and Christmas. To date, there are 41,085 layoffs that occurred in the sector. The layoff began as early as April with 8,000 workers to start with and is anticipated to continue through 2014.

The huge number of layoffs happening is unforeseen because the Affordable Care Act (ACA) is supposed to give health coverage to as much as 30 million Americans. With millions of possible patients, more hospital workers should be deployed.

"This is a challenging time for the health care industry," says Jim Terwilliger, president of two of Indiana health's hospitals, to USA Today. "The pace of change is far greater than any time in recent history."

The Indiana University Health, one of the hospitals affected with the recession, laid off 900 employees to reduce its expenditure by $1 billion in the next five years. It plans to do another round of layoff targeting 1,000 employees to reduce costs by eight percent by end of 2013.

The decisions of the layoffs are considered short-term while hospitals are still waiting for changes in the policies of reimbursement by Medicare, Medicaid and private insurance companies. The American Hospital Association said that the government has implemented a two percent cut on the reimbursement thus affecting the medical quality of service and higher readmission rates for the patients.

Funding from the National Institutes of Health was also cut by five percent due to sequestration. The number of in-patients also dropped by four percent due to economic crisis.

The good news is that according to J.P. Fingado, CEO of API Healthcare, the health care providers may add more staff by next year once the new health care policy is implemented.

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