Saturday, December 11, 2010

Hospital Expansions and Layoffs Shrink

The dysfunctional pattern of expansions and layoffs at U.S. hospitals is continuing, but on a smaller scale. In one of the most stark examples of this pattern, Shore Memorial Hospital in Somers Point, New Jersey, is offering severance packages to more than 300 employees to cover the gap created by a $115 million expansion plan, which is going ahead in spite of the financial distress. In general, though, recent hospital layoffs are leaving dozens, not hundreds, without jobs, and the scale of hospital expansions is smaller, with most hospital building plans being scaled down to $30 million or less, postponed, or canceled.

Another change is that hospital administrators are directly blaming their declining patient count on the sorry state of the national economy. It used to be said that health care was a recession-proof industry, but prescription drug purchases and hospital stays have been declining ever so slightly since a peak around 2007, and it seems as if this could be related to the economy. The flurry of hospital building was based on the hope, derived from out-of-date demographic studies, that the retiring baby-boom generation would be spending much of their time in the hospital. Health care administrators and forecasters are coming to accept the thought that the imagined rush of baby boom patients is not on the way, at least not now.