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ADVANCE Perspective: Nurses

Government Mandate Threatens Jobs

Published September 17, 2012 1:42 PM by Rebecca Hepp

Even in this tough economy, the healthcare sector has managed to create 169,800 jobs in the first quarter of 2012 alone, which accounts for one out of every five jobs created, according to the Bureau of Labor Statistics. But a recent report released by the American Hospital Association (AHA), the American Medical Association (AMA) and the American Nurses Association (ANA) found that it may be to no avail. According to The Negative Employment Impacts of the Medicare Cuts in the Budget Control Act of 2011, up to 766,000 jobs could disappear by 2021 — all on account of a 2% sequester of Medicare spending set forth in the Budget Control Act of 2011.

Beginning in early 2013, the Medicare cuts initiated by this sequester will start at an estimated $10.7 billion in 2013 and grow to $16.4 billion in 2021. Although these cuts will not reduce benefits to Medicare beneficiaries, it will reduce payments for healthcare services and Medicare Advantage, forcing many organizations to tighten their belts by reducing operational spending and limiting employee expenses. The report found that, for 2013 alone, an estimated 211,756 direct healthcare jobs (those directly paid by the funding dollar recipients such as nurses, other caregivers, housekeepers, independent contractors) will be lost; by 2021, this number is estimated to swell to 330,127.

The report takes into account not just these direct healthcare job losses, but also the indirect and induced effects that will ripple through the surrounding community. Other industries will feel the squeeze too, as hospitals order fewer supplies and reduce outside services. Those businesses will shrink their payroll, cutting an estimated 88,453 jobs in 2013 and an estimated total of 135,149 by 2021. Even community businesses will have fewer customers on account of unemployed workers reducing their household spending. These induced effects, the report states, could cause an estimated 196,222 job cuts in 2013 and an estimated 301,532 through 2021.

“Hospitals’ ability to maintain the kind of access to services that their communities need is being threatened,” AHA President and CEO Rich Umbdenstock said in a recent press release from the AHA, AMA and ANA.  “Cuts to hospital services could create devastating job losses in communities where hospitals have long been an economic mainstay.”  

The report lists the top ten industries affected by this 2% cut, and even though most are healthcare-related, other industries crop up as well. Some of the industries in the report’s list include: practitioner offices, nursing and residential care facilities, medical and diagnostic labs and outpatient services, home healthcare services, real estate establishments, food services and drinking places, employment services, wholesale trade businesses, and insurance carriers.

The AHA, AMA and ANA report, provided by Tripp Umbach, casts a cloud of uncertainty over the healthcare industry, and organizations across the country will struggle in the coming years to find ways to combat the Medicare cuts while retaining the doctors, nurses and staff necessary for high-quality coordinated care.

2 comments

A report issued in September generated headlines by forecasting hundreds of thousands of lost jobs if

October 1, 2012 11:10 AM

"The report takes into account not just these direct healthcare job losses, but also the indirect and induced effects that will ripple through the surrounding community." This seems an extraordinary claim, if you think about it. Trying to get at not only the major factors that effect job losses, all the indirect and induced effects sounds herculean. It is easy enough to key www.granted.com/ and get a list of jobs in that field -- very straightforward -- but when you think of how every bit of legislation directly concerning this market, and even legislation outside it, drastically effects how these corporations and institutes grow and change their programs, it seems that only something like Adam Smith's invisible hand could keep track of the chaotic calculus involved. In other words, it seems prudent to take estimations regarding 2021 tentatively.

Daniel June, journalist September 19, 2012 1:01 AM
Grand Rapids MI

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