A Dozen Hospitals Are Laying Off Staff and Blaming Obamacare. Don’t Believe Them.

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. “We’re being paid less, and we either stick our head in the sand or make changes for the future so patients can continue to access us for their care,” according to John Muir spokesperson Ben Drew.

When Obamacare was being debated in Congress, its opponents tried to tar it with a deadly label: “the job-killing health law.” So is the ACA finally living down to its sobriquet?

Not exactly. While the recent news makes for provocative headlines, the devil’s in the details — and the financial reports.

A Closer Look at Industry Pressures

It’s clear that 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, economists told  me. 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.