WASHINGTON -- Hospitals in Texas and across the country will face significant job losses, service reductions and other belt-tightening measures when President Barack Obama signs the order Friday implementing a series of automatic budget cuts.
The sweeping cuts, known as sequestration, would slash $85 billion by cutting jobs and government programs, ranging from Head Start to defense. It also would impose a 2 percent reduction in Medicare payments to hospitals, doctors and insurers, beginning in April.More than 4,200 hospitals that are among the largest employers in their communities would lose nearly $3 billion under the Medicare cuts this year, according to an analysis by iVantage Health Analytics, a Maine healthcare research firm.That could trigger the loss of 73,000 hospital jobs nationwide and tip the operating margins of nearly 100 hospitals from positive to negative, the company estimates.Hospitals projected to flip from operating in the black to the red include notable institutions like Cedars-Sinai Medical Center in Los Angeles, which faces an estimated $9 million cut in Medicare payments; Yale-New Haven Hospital in Connecticut, which could lose an estimated $6.4 million; Loma Linda University Medical Center in Southern California, which stands to lose nearly $4 million in Medicare payments; and the Mayo Clinic Hospital in Phoenix, which is looking at an estimated $2.4 million loss.Even though most hospitals are designated as "not-for-profit," it's important that their revenue match or exceed their costs in order to remain financially viable. Personnel is where many hospitals will begin paring costs to offset the cuts, because wages and salaries account for about 60 percent of a typical hospital's budget."The sad part about it is that when you have hospitals switching from profits to losses, you know that the impact is going to be job-based," said John Morrow, executive vice president at iVantage. "Because you just can't operate in the red. It's not a sustainable business model."In addition to large urban hospitals with thousands of employees, smaller rural hospitals will also feel the pain. According to the data, 63 rural hospitals could become unprofitable because of sequestration, compared to just 33 urban hospitals.Rural hospitals are usually more dependent on Medicare for revenue than urban facilities. They also have tighter operating margins because they serve fewer patients, many of whom are either uninsured and cannot pay, or are enrolled in Medicaid, which has low reimbursement rates.Have more to add? News tip? Tell us
