Sunday, September 16, 2001

Health groups preparing for more job cuts

Rising costs collide with higher demand

By Tim Bonfield
The Cincinnati Enquirer

        In the space of five months, more than 1,200 hospital jobs have vanished from Greater Cincinnati.

        On Wednesday, Mercy Health Partners cut 325 jobs. In April, it closed Mercy Hamilton hospital, eliminating 630 jobs. In June, the Health Alliance of Greater Cincinnati eliminated 330 jobs.

        That's 1,285 jobs — roughly equivalent to closing a second hospital in addition to Mercy Hamilton. Meanwhile, hospitals are holding an uncounted number of job slots vacant in budget-saving efforts.

        Yet the cuts may not be over. Tristate hospitals continue to reel from rising costs and limited income. The costs of hiring hard-to-recruit nurses and pharmacists, rising energy bills and the unrelenting burden of caring for the uninsured and underinsured are growing faster than the slight gains in pay that hospitals are getting from some managed care health plans.

        “We're not done as a community. There are going to be more cuts,” said Lynn Olman, president of the Greater Cincinnati Health Council. “It's a very scary time.”

        Scary because the hospital job cuts are coming despite steady increases in demand for health care services from an aging population. Scary because many hospitals have delayed replacing aging equipment.

        Scary because nobody can tell where or how the hospitals will get more money in an era of tight government budgets and a slowing economy.

        “I've heard people say, what other industry would you like to be in? It's not pretty anywhere,” Mrs. Olman said. “But this isn't a situation where our business is going down. We've got more people coming in the door all the time. The problem is they just can't pay.”

        All of Greater Cincinnati's 30 acute-care hospitals are non-profit organizations. Yet they represent a powerful force in the local economy, employing more than 37,000 people and spending more than $2.7 billion a year on wages, goods and services.

        Few realize, however, how deeply Tristate hospitals have been cut even as the population has grown and aging citizens demand more care.

        Since 1984, nine hospitals have closed, including five acute-care hospitals and four psychiatric hospitals. Along the way, the surviving hospitals have shrunk from their former capacity peaks.

        As a result, the number of hospital beds per 1,000 residents has been cut in half from 4.51 beds per 1,000 people in 1984 to 2.09 per 1,000 in 2000. That's among the lowest nationwide, Mrs. Olman said.

        “The question we're asking ourselves now, is whether this is too low. If we're among the lowest in the country, is that a good thing?” Mrs. Olman said.

        Improved medical technology, combined with tight reimbursement from private and public sources, help explain why hospitals have dwindled.

        Better medications for chronic disease help prevent hospital stays. Minimally invasive surgical techniques speed recovery time, turning many operations that once required week-long stays into outpatient procedures. Meanwhile, budget-conscious employers have pressured hospitals — especially in Cincinnati — to become more cost-efficient.

        But better technology has proven to be expensive. Sick people still need human care. And hospitals still need support staffs, no matter how short the patient stays become.

        Many hospital executives say they've been able to maintain high quality health services despite the many cuts. But they are expressing more fears about the future.

        “There is a public policy issue here. Our society expects that all people will receive equal levels of care, regardless of their ability to pay. Doing that has become much more expensive,” said David Jimenez, interim president and chief executive at Mercy Health Partners.

        “Our mission is to run an organization financially stable enough to be able to serve the poor,” Mr. Jimenez said. “If we drive our not-for-profit organizations into bankruptcy, it won't do away with the uninsured and the underinsured.”

        The Health Alliance, for example, has pumped $100 million into improved computer systems that have made it possible to cut jobs in accounting, billing and human resources functions.

        That kind of cut can be good for health care. But there's a limit to such improvements, especially if hospitals cannot afford to keep up with technology.

        “Health care quality today is better than it was three years ago,” said Bob Griffith, senior vice president and chief human resources officer for the Health Alliance of Greater Cincinnati.

        “But we need to receive a fair level of reimbursement. We need to generate a gain from our operations to be able to reinvest in technology.”


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