I suspect that the best answers, though, could be found from smaller employers. Baptist Health of Arkansas recently announced plans to cut nearly 2.5% of its 7,300 employees. Spokesman Mark Lowman specifically mentioned “a difficult and challenging environment of substantially less government reimbursement, burdensome government regulations, rapidly rising costs of supplies, increasing charity care and bad debt, and the need for technology and medical innovations” as reasons for the layoffs.
Impact of Obamacare
Several big hospital chains are consolidating in part due to the Affordable Care Act, commonly referred to as Obamacare. Mark Smith, president of health-care consulting firm Merritt Hawkins, said that health-care reform has already had a negative impact on jobs thus far as hospitals streamline to get ready for full implementation of Obamacare. Consolidations could lead to even more job cuts.
Community Health Systems (NYSE:CYH) plans to buy HMA, forming a combined operation with 206 hospitals in 29 states. Community Health CEO Wayne Smith said the merger would help the company be “well positioned to realize the benefits of health care reform.”
Likewise, Tenet Healthcare Corp (NYSE:THC) is buying Vanguard Health Systems, Inc. (NYSE:VHS). One key reason given for this acquisition: to increase benefits expected to be realized under health-care reform. The combined organization will include 79 hospitals and 157 outpatient facilities.
Many investors are banking on these moves to sustain the rapid rise in hospital stocks over the last year. The hope is that Obamacare will drive uninsured Americans to purchase health insurance via online exchanges. This would then potentially lead to higher health-care utilization and lower bad-debt write-offs for hospitals.
From a jobs standpoint, that would indeed be good news. Higher health-care utilization means more health-care workers are needed. Higher profits from lower bad-debt write-offs means that hospitals could better afford to hire those workers.
If this scenario materializes, the disappointing July health-care jobs numbers could be a temporary phenomenon. However, if things don’t go as well as hoped, the industry won’t see another 10-years of job growth like it has over the last decade.
The article What’s Behind the Sudden Health Care Job Growth Slowdown? originally appeared on Fool.com and is written by Keith Speights.
Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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