Hospitals contend with effects of ailing economy

12/14/2008

More employees and retirees could lose health insurance benefits as corporate cutbacks pile up, making demands for health care - including mental health services - even greater.

That makes the University of Toledo Medical Center's decision to close its geriatric psychiatric unit this month even harder to take for Andrea McKenna, who had been the department's director before being laid off. Closing the unit, Ms. McKenna said, was short-sighted in a climate where more job and benefit losses are inevitable.

"There's going to be more coming, but we've already dropped off the most vulnerable population," said Ms. McKenna, who helped nursing staff pack up the closed department recently.

She added: "We just need to be [financially] judicious. Eliminating programs is not the answer."

As hospitals nationwide grapple with symptoms of an ailing economy, including having more patients who require charity care because they have no insurance or their deductibles have increased, layoffs and reducing services are two steps institutions are considering, according to a recent report by the American Hospital Association.

"There's an increasing number of hospitals that are cutting back," said Caroline Steinberg, the report's author. "They're having to consider layoffs."

With the exception of St. Luke's Hospital in Maumee, which expects to return to profitability in 2010, Toledo-area hospital operators said they expect to continue achieving their operating profit targets. All, though, are faced with making financial adjustments.

"It's going to be a tough economy," said Kathleen Hanley, chief financial officer for ProMedica Health System.

So far, the geriatric psychiatric program started eight years ago at the former Medical College of Ohio is the only patient-care victim locally. The unit primarily cared for people 65 and older who had dementia combined with depression, anxiety, or other problems, said Ms. McKenna, who noted that she tried to get UT officials to expand the unit to care for all elderly patients.

Demand for the unit was declining, and UTMC officials likely will use the space for services that need more room, including inpatient rehabilitation, said Dr. Jeffrey Gold, UT provost of health sciences, executive vice president for health affairs, and medical college dean.

"All hospitals do this," Dr. Gold said. "You add one service, you cut another service."

The geriatric psychiatric unit's closure and other cutbacks are eliminating 37 jobs at UTMC, although the exact number of layoffs has not yet been determined. But UTMC is not the only hospital that has gone through layoffs.

Mercy Health Partners has laid off 70 employees who did not directly deal with patients in the Toledo area this year, including some part-time and contingency workers.

Plus, with patient volumes typically down over the holidays, Mercy is considering having some employees not essential to patient care take vacation or time off without pay for two weeks, a Mercy spokesman said.

ProMedica recently eliminated 30 management, clerical, and housekeeping jobs at Toledo Hospital and Sylvania's Flower Hospital, although some were placed in positions elsewhere.

Job losses are mounting across Ohio in the hospital industry, which is a major employer with 230,000 full-time positions.

Layoff claims jumped from about 10 to 50 or more a week starting in September at the Ohio Hospital Association, which manages the self-insured unemployment program for 140 of 182 hospitals statewide, said John Callender, association senior vice president and chief financial officer.

Many of the job cuts are not directly related to patient care, and the overall impact is the highest it has been since the association started managing hospital unemployment 20 years ago, Mr. Callender said.

"A lot of it's not because of lack of work," Mr. Callender said. "It's because of lack of money to pay."

Trouble getting financing for projects, concerns about lowered Medicare and Medicaid reimbursements, losses on investments used to help ends meet, more people seeking emergency-room care, and fewer elective procedures are among other economic forces enveloping hospitals nationwide, health-care analysts and experts said.

"It's a very troubling forecast," said David Bender, vice president of the Lewin Group, a health-care consulting firm.

More U.S. doctors also are seeking financial help from hospitals, including employment or increased pay for services, according to the recent American Hospital Association report.

Doctors in the Toledo area are among those seeking assistance from hospitals, local executives said.

Mercy, for example, is working with doctors to see what kind of arrangements can be made, said Samantha Platzke, Mercy chief financial officer.

Sometimes, she said, those relationships clearly are mutually beneficial: At St. Charles Mercy Hospital, doctors and the hospital formed a joint company to run the operating rooms in hopes of improving quality.

Some doctors want to be employed full time, another step Mercy is willing to take so the community and Mercy retain needed physician services, Ms. Platzke said. "Obviously, the hospital doesn't operate unless there's physicians," she said.