Layoffs loom for two major academic medical centers as managed-care penetrates America's heartland.
University of Chicago Hospitals will begin in May to lay off 300 of its 4,400 full-time employees as part of a campaign to cut costs.
Meanwhile, University of Iowa Hospitals and Clinics in Iowa City, amid the second year of a five-year effort to cut $65 million, said layoffs are a possibility for the state's only academic medical center.
"Every extent possible is being examined so there won't be layoffs," said Dean Borg, director of public information at University of Iowa Hospitals and Clinics. "We're doing this on a phased basis, but we're not saying there won't be the possibility of layoffs. We want to do the reductions in a thoughtful manner."
The University of Iowa medical system has 7,600 employees and a turnover rate of 500 jobs a year. Executives hope to eliminate most of the jobs through attrition or to find work for those employees outside the hospital in other university positions, Borg said.
Unlike the University of Chicago, the University of Iowa has no specific number of jobs it needs to cut. At University of Iowa, all hospital departments are examining ways to streamline their operations.
The layoffs at the University of Chicago "are a conglomeration of things, but the only nuance is the decline in Illinois' Medicaid reimbursement to hospitals," said Susan Phillips, vice president of government and public affairs for the university.
The moves aren't surprising because major academic medical centers are being forced to reduce costs to compete with their community hospital counterparts.
Teaching hospitals' costs, besides those relating to patient care, include graduate medical education and research. They can be 30% to 40% higher than those of community hospitals, according to the Prospective Payment Assessment Commission, a congressional advisory panel.