It's a cliche to say healthcare is a people business, but the nearly 4 million who work at the nation's hospitals may be the biggest casualties of reform in 1994. Their jobs are on the line.
Changes occurring in preparation for national healthcare reform have major implications for human resources. This year, look for the pace of downsizing and work redesign to pick up; be ready for more management shake-ups; and watch for some big-name executives to hang out their consultant shingles after they're repositioned out of a job.
The backdrop: The number of full-time equivalent employees working at the nation's 5,300 hospitals grew 3% to 3.6 million in 1992 from 3.5 million in 1991, according to the latest figures available from the American Hospital Association. At the same time, total hospital expenses rose 9.1% in 1992, compared with 9.9% in 1991. Of that, labor expense increased 8.6% in 1992, compared with 9.2% in 1991.
The action: To lower their costs, hospitals are targeting their work forces, which typically make up more than half of their operating budgets. Hospitals are downsizing across the board and through specific work redesign projects.
Hospitals also are merging, acquiring and affiliating at a pace never seen before in the healthcare industry. The elimination of duplicative services often means job elimination. And that doesn't exempt top executives. There's only room at the top for one person.
Hospitals also are looking for lower-cost alternatives to physicians and nurses. They're replacing physicians with "advanced practice nurses" and replacing nurses with "unlicensed assistive personnel."
The outlook: The number of hospital FTEs should level off or perhaps slip in 1994. Total FTEs haven't declined since the years immediately following the start of Medicare's prospective payment system. They've grown steadily since 1986.
Also, expect a corresponding drop in the rate of labor-cost increases. During the first six months of 1993-the latest figures available-total hospital expenses rose just 8%, compared with 9.9% during the same period in 1992. Of that, labor expenses grew 8.4% during the first six months of 1993, compared with 8.9% during the same period in 1992, AHA figures show.