Dive Brief:
- Brigham and Women’s Hospital is offering voluntary buyouts to 1,600 workers, The Boston Globe reported. The decision comes as U.S. hospitals are facing rising expenses and shrinking admission rates.
- While the Boston hospital remains profitable, officials said reduced payments by private and government insurers and high labor costs necessitated the belt-tightening move.
- The buyout could turn into layoffs later this year if enough people don’t opt in. To be eligible, workers must be 60 or older.
Dive Insight:
Hospitals are under increasing pressure to cut costs, and that means reining in labor costs, which are a big part of overall expenditures. As fixed cost businesses, one of the quickest ways to cut costs in the near term is to curb overtime and trim variable staffing costs.
According to a 2015 American Hospital Association survey, hospital admissions declined from 36.6 million to 35.4 million from 2010 to 2013. During the same period, the number of hospital beds decreased from 941,995 to 914,513.
Expenses for all U.S.-registered hospitals are currently $936 billion, up from $859,4 billion in 2013, according to the group, and more than half (52%) lost money on operations in the last year. In addition to feeling squeezed by insurers, Brigham is strapped with debt from capital projects — a $335 million EHR that launched in 2015 and a $510 million building that opened in 2016.
There’s also ongoing uncertainty about the future of the Affordable Care Act and regulatory changes around new value-based reimbursement models, as well as possible changes in the Stark law, which can affect admission rates. A new amendment was unveiled for the AHCA, which would repeal the ACA, this week which grabbed more conservative support but the GOP is not holding a vote on the bill this week as it does not have the votes to pass the House of Representatives.