At a time when investor-owned hospital chains have been reporting favorable earnings trends and higher reimbursements from public and private payers, at least one investor-owned hospital is relying on the familiar tactic of blaming its layoffs on declining Medicare payments.
Fawcett Memorial Hospital, a Port Charlotte, Fla., facility owned by HCA, the nation's largest hospital chain, has cut 30 to 35 jobs from its employee base of 650 because of continuing effects of the Balanced Budget Act of 1997, hospital officials announced earlier this month.
"These reductions in the workforce are made at a time when the healthcare industry is attempting to maintain hospital services in an environment of reduced reimbursement for hospital inpatient stays and outpatient tests and procedures," officials from the 241-bed hospital announced.
In a written release, they said the hospital would lose $30 million over the next few years because of the budget law. The hospital also will lose $1.5 million annually because of the shift to an outpatient prospective payment system, according to the statement. Hospital Chief Executive Officer Thomas Rice did not return repeated telephone calls, and hospital spokeswoman Deborah Sweetland would not answer any questions beyond what was in the hospital's press release.
The same hospital gained notoriety in 1997, when a federal grand jury indicted three and eventually a four midlevel HCA executives for conspiring to commit criminal Medicare fraud. The executives were charged with cheating Medicare and other government health insurance programs out of $3 million in overpayments to Fawcett by filing false cost reports and hiding the information from government auditors.
HCA officials recently have said that the overall company, at least, is experiencing more favorable reimbursement trends, thanks to congressional actions in 1999 and 2000 that restored some Medicare payments in the next few years. In July, Jack Bovender, HCA's president and chief executive officer, said in a conference call with analysts that the company was experiencing the "best top-line growth we've seen in years" (July 30, p. 36).
"(Medicare reimbursement) has improved over the year prior, when everybody took the hit from the balanced-budget act," said HCA spokesman Jeffrey Prescott. "It's not where we think it needs to be, but it's gotten a little better."
Prescott said he did not know the details of Fawcett Memorial's situation or why it was laying off employees.
"You can't apply an industry trend to every single situation across every single hospital across the country," he said. "There are going to be places, for whatever reason, where the trend doesn't apply."
Fawcett Memorial reported net income of $6 million on net patient revenue of $73.1 million in 1999, the latest year for which data were available, according to Solucient, an Evanston, Ill.-based healthcare information firm.