"We had been seeing steady increases in hospital employment even as we saw a shift away from inpatient care because a lot of that inpatient volume is being replaced by outpatient volume. Overall demand for hospital care is not really dropping off. It's that the funding for the same amount of care is getting to be less."
Steinberg says hospitals are reluctant to hire because they're bracing for massive reductions in federal funding over the next 10 years. "It's not just healthcare reform. We've seen about $100 billion of other cuts coming that are not healthcare reform since 2010."
"You've got the sequestration, which is about $45 billion over 10 years, then you have the coding offsets and they've tacked on more cuts to Medicaid (disproportionate share payments) and cut the reimbursements for bad debt. There are a lot of other cuts that hospitals are facing that are causing them to really cut back on staff."
Adam Powell, a Boston-based healthcare economist, says the move away from fee-for-service reimbursements is changing the way healthcare is delivered. "We are seeing a movement toward accountable care organizations and contracting and this means that healthcare providers will have fixed revenues and can only increase their profitability by decreasing their costs. Now, seeing as providers tend to have the largest cost being their staffs the only way to decrease costs is to reduce staffing," says Powell, president of Payer+Provider consultants.