Be careful of cuts to hospitals
Since the start of the Great Recession, California has lost 1.3 million jobs and hit unemployment numbers unseen since 1982. But while other sectors struggle to retain workers, healthcare is one of the few sectors actually creating jobs, especially in hospitals.
According to the U.S. Bureau of Labor Statistics, hospitals nationwide have added more than 84,000 private-sector jobs over the past year. That adds to the more than 5 million people already working in hospitals — 500,000 in California alone — caring for patients, coordinating care in hospital pharmacies and labs, and keeping the facilities maintained. Healthcare overall has been responsible for 1 in 5 new jobs in recent years.
The congressional “super committee,” tasked with cutting the daunting $1.3-trillion federal deficit, is considering changes that may seriously jeopardize those jobs, threaten the availability of healthcare services in some communities and add to the challenge of making commercial health insurance more affordable.
The fiscal challenges our country faces are formidable, and by no means do I believe that America’s hospitals should shirk responsibility to rein in our nation’s spending. In the Affordable Care Act passed last year, hospitals across the nation made commitments to help reduce the federal deficit by agreeing to accept $155 billion less in Medicare payments over the next 10 years than would have been spent under federal law. The physicians, nurses and other staff in our nation’s hospitals are focused every day on improving operating efficiency and providing more integrated, coordinated care to patients within and outside the walls of the hospital. These efforts will contribute even further savings for the Medicare program and will benefit commercially insured patients as well.
As the “super committee” meets in Washington, it is important to have a full understanding of the impact that potential cuts to hospital care would have.
Medicare and Medicaid are under the “super committee’s” microscope, including a proposal reported to slash $500 billion from the programs. The notion that cuts to hospital care can be made without impact on patients or the communities in which they live is misguided.
Hospital care is a labor-intensive endeavor. Wages and benefits paid to employees account for the majority of every hospital’s spending. In addition, every hospital job supports two or more jobs as our facilities and our employees buy goods and services from other businesses — frequently local ones.
It’s estimated by an independent research group that a 2% cut to Medicare alone would eliminate about 200,000 direct and indirect hospital jobs nationally by 2021. These are not just new, needed jobs but also existing ones that families are relying on.
For years, hospitals have been paid less than it costs to care for Medicare and Medi-Cal patients. In California last year, payments from Medicare and Medi-Cal fell short of the cost of caring for those patients by $8.4 billion. Further underfunding these programs could do real harm, as more than 60% of people hospitalized in the state rely on one or both programs. Their need for healthcare won’t go away simply because the program can’t afford them.
While hospitals absorb much of the underfunding from government payments, the shortfall also results in shifting costs to commercially insured patients as hospitals strive to remain financially viable and to meet the growing demands of an aging population with increasing levels of chronic disease. Cost shifting has been a significant contributor to the rise in commercial insurance costs over the last decade.
As our country struggles to get out of the terrible economic times we face, we all must do what we can to save the jobs we have, especially those that are so vital in taking care of the health of everyone in the community. A healthy nation depends on healthy Americans.
Thomas M. Priselac is president and chief executive officer of Cedars-Sinai Medical Center.
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