Nearly four out of every 10 hospitals are trimming their work forces to reduce operating costs and restructure themselves to better cope with competition and managed care.
That's up significantly from last year, when 27% of surveyed hospitals said they were cutting hospital jobs.
And, ironically, the most aggressive staff trimmers this year are church-affiliated institutions-the hospitals generally thought of as less cost-conscious and more reluctant to push people into the ranks of the unemployed.
Those are the key findings of this year's hospital human resources survey conducted by Deloitte & Touche, a national accounting and consulting firm. It's the eighth annual survey sponsored by MODERN HEALTHCARE.
Approximately 700 hospitals responded to the survey, which was conducted earlier this fall. Of the hospitals that responded:
Some 49% were private, not-for-profit hospitals; 26% were government facilities; 14% were not-for-profit, church-affiliated hospitals; and 11% were for-profit companies.
Some 42% had fewer than 100 beds; 19% had between 100 and 199 beds; and 39% had 200 or more beds.
Hospital respondents employed an average of 694 full-time and 248 part-time employees each.
Like past Deloitte & Touche human resources studies, this year's survey queried hospitals about the standard benefits they provided employees. However, for the second year in a row, the survey also asked hospitals to quantify their employee restructuring efforts in the face of national and local healthcare reform and the whirlwind of marketplace changes taking place with or without government-mandated measures.
Cutting costs the priority. Reducing operating costs was the most frequently cited response to how hospitals are dealing with industry changes. Some 69% of the hospitals said reducing operational costs is a high priority, as is "re-engineering" their patient-care delivery systems, cited by 49% of the respondents.
Labor costs are a logical focus of hospital budget cutters. According to the latest data from the American Hospital Association, they made up more than half of hospitals' total expenditures of about $266.1 billion last year.
Last year's was perhaps the first industrywide survey to document anecdotal evidence that many hospitals are slashing their work forces.
Despite the restructuring that took place at many hospitals, the number of full-time-equivalent employees working at the nation's approximately 5,300 acute-care hospitals inched up to about 3.7 million last year from about 3.6 million in 1992, AHA data reveal.
The 1993 figure represents the seventh consecutive year of growth in hospital FTEs. The last time total hospital FTEs declined was in 1984, when they dipped to about 3 million from about 3.1 million in 1983.
This year's MODERN HEALTHCARE/
Deloitte & Touche survey also queried hospitals for the first time about other timely human resources issues, including:
The benefits hospitals provide physicians after they buy practices.
Hospitals' reaction to increasing government scrutiny of the tax-sheltered annuities offered to employees.
Layoffs on rise. On the restructuring front, some 38% of the hospitals that responded to this year's survey said they're in the process of trimming their work forces, compared with 27% of last year's hospital respondents (Dec. 20/27, 1993, p. 49).
Most of the hospitals that are trimming their work forces are thinning their ranks less than 10%. However, some 23% of the hospitals with cutbacks are eliminating 10% to 30% of their work forces (See chart, this page).
Not surprisingly, more larger hospitals than smaller hospitals are making staff reductions, the survey found.
For example, some 55% of this year's hospital respondents with 300 to 399 beds are reducing the size of their work forces, compared with 22% of the hospitals with fewer than 100 beds.
But it's smaller hospitals, generally, that are making bigger trims in terms of percentages of their work forces.
For example, hospitals with 100 to 199 beds are cutting their staffs by an average of 7%, compared with 6% for hospitals with 400 to 499 beds.
The most aggressive staff trimmers this year are not-for-profit hospitals generally and church-affiliated hospitals specifically.
Some 37% of the private, not-for-profit hospitals said they're reducing the size of their work forces this year, compared with 32% of the government hospitals and 31% of the investor-owned facilities.
But more than half of the church-affiliated hospitals that responded to the survey-some 53%-said they're cutting their staffs. That's a substantial hike from 37% of the church-affiliated hospitals included in last year's survey.
"Many religious hospitals have been behind the curve on cost-cutting efforts, and now they're trying to catch up," said Robert Cooper, Deloitte & Touche's director of actuarial benefits and compensation in Chicago.
Targeting services. In implementing cuts, more hospitals are looking at specific departments or services for opportunities to reduce. In this year's survey, for example, 73% of the hospitals making cuts targeted specific departments or services, compared with 57% last year (See chart, p. 36).
The findings reflect the fact that hospitals are dropping entire departments because they're realizing they can't provide every possible service anymore, said William Chafetz, manager of actuarial benefits and compensation in Deloitte & Touche's Chicago office.
The findings also reflect the elimination of duplicative departments or services following consolidations with other hospitals, Mr. Chafetz said.
Although the "slash and burn" label has been used to describe past work-force reductions at hospitals, only 5% of the hospitals making trims this year implemented across-the-board work-force reductions (See chart, p. 36).
Nurses are one group increasingly targeted for layoffs. Some 27% of the hospitals in this year's survey said nurses are targeted for layoffs, compared with 19% last year.
The findings support the anecdotal evidence that many hospitals are replacing high-priced registered nurses with lower-paid employees who provide basic bedside care.
Whether the exchange is hurting the quality of patient care is the subject of an ongoing investigation by a special task force of the
National Academy of Sciences' Institute of Medicine.
Such restructuring of nursing duties is largely responsible for the ongoing decline in the hospital vacancy rate for registered-nurse positions. The rate hit a seven-year low of 5.3% in 1992 from a peak of
12.7% in 1989. It likely has slid further since then.
Another factor, of course, is the ongoing decline in the inpatient census at hospitals, which results in the closing or conversion of space and the elimination of jobs, including many nursing positions, Mr. Cooper said.
Other employees high on hospitals' hit lists are nonexempt hourly employees and middle managers (See chart, p. 34).
Morale a concern. Not surprisingly, employee morale is the most pressing human resources issue facing hospitals this year. That was selected by 75% of the respondents and was followed closely by the impact of downsizing, cited by 62% of the hospitals. Those figures are up from 69% and 48%, respectively, last year.
And for those employees who survived downsizing efforts, hospitals placed greater restrictions on many of their benefits, including medical insurance coverage.
Some 42% of the hospital respondents offered traditional indemnity coverage to employees this year, compared with 50% last year. Coverage through a PPO also dropped to 32% from 45%.
But HMO coverage nearly doubled, indicating further efforts by hospitals to control labor costs. Some 50% of the survey respondents offered employees HMO coverage this year, compared with 26% last year (See chart, this page).
However, Mr. Chafetz cautioned that the big jump in HMO coverage may be the result of an under-reporting of HMO coverage in last year's survey.
One group that may be adding to hospitals' healthcare costs as employers