ACA Provides An Out For Hospitals

Hospitals tend to be among the largest employers in their communities -- which means that any individual decision to lay off staff can have an outsized local impact. And taken together, a dozen recent announcements seem to paint an especially dire picture for hospitals (and their communities) around the nation.

For example, NorthShore in Illinois says it will lay off 1% of its workforce. The staffing cuts "ensure NorthShore remains well positioned to deal with the unprecedented changes brought on by the Affordable Care Act," according to a memo from the health system's chief human resources executive.

And California's John Muir Health is offering staff voluntary buyouts ahead of ACA implementation.  So is the ACA finally living down to its sobriquet?

Not exactly. 

It's clear something is shifting in the hospital market. After years of employment growth, hospitals' hiring patterns have largely leveled off. Collectively, organizations shed 9,000 jobs in May -- the worst single month for the hospital sector in a decade.

Some of those decisions reflect industry-wide belt-tightening, as Medicare moves to rein in health spending by moving away from fee-for-service reimbursement and penalizing hospitals that perform poorly on certain quality measures.

And uncertainty around ACA implementation is trickling down to hospital staffing decisions, according to economists. Many organizations still aren't sure how the pending wave of newly insured patients will affect their profit margins, given that many of these individuals may be sicker and will be covered by Medicaid, which reimburses hospitals at lower rates than Medicare and private payers.

But the ACA is just one factor affecting hospital finances, and its impact isn't consistently negative. In some cases, hospitals have even staffed up in hopes of capturing new patient volumes from the ACA's insurance marketplaces or receiving added revenue through the law's accountable care organizations and other pilots.

In some cases, it's not hospital officials casting blame on the law, but opportunistic lawmakers -- and even ambitious headline writers.

When Emory Healthcare in Atlanta recently announced plans to lay off 100 staff members, local media chalked the cuts up to the Affordable Care Act. 

But when The Atlantic's Ford Vox dug deeper, he found that the decision was based less on the ACA and more on local market realities. In fact, Emory officials stressed that "these changes have nothing do with Obamacare," Vox wrote, but reflect the organization's decision to reallocate resources away from the inpatient psychiatric program.

Local reporters in Texas also seized on Covenant Health's recent announcement that it would lay off 49 employees. While the CEO explained that the staff reduction reflected pending declines in hospital reimbursement -- partly brought on by the ACA -- Rep. Randy Neugebauer, R-Texas, went further. "This is likely to happen at more and more hospitals under Obamacare," Neugebauer told one TV station. "We need to repeal [the ACA] now before it creates any more problems."

However, another set of headlines suggest a different story could be written. Some hospitals are laying off staff -- or even closing their doors -- because they say their states aren't doing enough to implement the Affordable Care Act.

The Huffington Post's Jeffrey Young reports on one North Carolina hospital that recently shuttered because the state refused to opt into the ACA's Medicaid expansion; according to Vidant Pungo Hospital officials, expanding coverage would have cut their uncompensated care bill and boosted revenues.

But looking at the health system's balance sheet reveals that Vidant Pungo's financial concerns went well beyond the ACA; for example, the aging facility likely needed a capital infusion to renovate its aging physical plant. Meanwhile, some of the hospitals that are blaming the ACA for their recent staffing decisions have had longstanding financial challenges.

Since its passage four years ago, the ACA has been many things to many groups: a rallying point for liberals, a stalking point for conservatives, a transformative package of reforms for the health care industry.

This time around, the law may be playing a new role: Convenient scapegoat for hospitals' relatively routine staffing decisions.

Dan Diamond is a contributing editor to California Healthline, where a version of this column first appeared.