Hospitals face cuts, restructuring to cope with flagging economy

"The nation's largest public hospital system plans to slash its work force—including doctors and nurses—by about 10% over two years as government aid drops and the number of uninsured patients jumps," The Wall Street Journal reports. New York City's Health and Hospitals Corporation, trying to combat a $1 billion deficit, plans to cut "2,600 jobs in the fiscal year that begins July 1. That comes on top of 1,300 positions to be eliminated this year." Many of the other public systems around the country are also making changes, to help weather what New York Mayor Michael Bloomberg called "the crushing economics facing the health-care industry" (Saul and Sataline, 3/26).

Other hospitals are restructuring. The Boston Globe reports, "Caritas Christi Health Care's chief executive pledged yesterday that the chain's pending sale to a private equity firm will help it to reduce costs in a state where medical spending, most of it on hospital services, has been climbing by 7.5 percent a year." Cerberus Capital Management, the venture firm, will convert the nonprofit hospital network to a for-profit one, and some analysts say its likely investments in new technology could actually increase costs (Kowalczyk, 3/26).

A separate Boston Globe article provides the back story: "Shortly after the Civil War, Andrew Carney, an Irish-born tailor who had made a small fortune selling uniforms to the US Navy, bequeathed $56,000 to a fledgling hospital in South Boston. He wanted it to serve the working class, 'without distinction of creed, color, or nation.' Even in those early days, Boston's Catholic hospital had financial problems…" Now, Catholic leaders are saying Cerberus' money will help preserve their mission (Wangsness, 3/26).

---

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.