Hospitals lost 27,000 jobs in May, showing they have yet to recover financially.
By Mallory Hackett, Associate Editor, Healthcare Finance
June 5, 2020
WHY THIS MATTERS
The COVID-19 pandemic has affected the economy and unemployment in record numbers. The uptick in jobs announced today follows an historically high unemployment rate of 14.7% in April, the highest since the Great Depression.
The employment report shows an economy fighting to rebound. The overall unemployment rate declined by 13.3% in May, as 2.5 million jobs were added to the economy. The Bureau of Labor Statistics attributes this to the recent re-opening of many states’ economies.
However the numbers also show that hospitals have yet to recover financially from the surge of COVID-19 patients and the loss of revenue from postponed or cancelled elective procedures. Many were forced to furlough or lay off staff because the billions earmarked for hospitals in the Coronavirus Aid, Relief and Economic Security Act was not enough for most hospitals to operate at previous expense levels.
Hospital visits started to drop nationwide in March as state and federal officials called for postponing non-covid-19 treatments when possible to free up health-care resources. These cancellations included surgeries, outpatient procedures and even preventive services.
By mid-May, almost 94 million adults had delayed medical care because of the coronavirus pandemic, the Census Bureau reported in its Household Pulse Survey. Some 66 million of those needed but didn’t get medical care unrelated to the virus.
“Whether you have a lot of cases, or don’t have a lot of cases, you’re going to have a financial hit,” said Will Ferniany, chief executive of the UAB Health System. While covid-19 patients never came close to filling intensive care beds at its Birmingham, Ala., hospital, occupancy of other beds dropped to less than half. Ferniany’s system is losing $70 million a month in patient revenue, which it must try to make up with cost-cutting and federal aid.
Under the Cares Act, the Department of Health and Human Services says $175 billion was allotted for health-care providers, including hospitals in rural and high-impact areas and places treating uninsured covid-19 patients. But hospitals could miss out on some aid if they hadn’t treated a minimum of 100 covid-19 patients, despite the pandemic’s widespread financial damage.
THE LARGER TREND
Overall education and health services employment increased in May, adding 424,000 jobs, after suffering a decrease of 2.6 million in April.
Other industries that saw employment increase last month were leisure and hospitality, construction, education, and retail trade. Government employment, on the other hand, continued to decline.
It’s unlikely that all the lost hospital jobs will come back. Instead, a future where hospitals continue to cut costs, eliminate duplicated services and cast a critical eye on their need for buildings is more likely.