WakeMed Health & Hospitals laid off 31 people last week in a reorganization that CEO Bill Atkinson warns is a taste of things to come under federal health care reform, which is designed to squeeze costs out of health care delivery.
Atkinson couldn’t say how many jobs are at risk in the 9,400-employee system but noted that the elimination of 31 positions will be offset by the creation of 33 new slots.
What is clear is that the Affordable Care Act, dubbed Obamacare by detractors, is increasingly being cited by health care organizations as they seek to explain unpopular decisions that raise costs or cut expenses within organizations.
“More of this is coming all over the nation,” Atkinson said. “Reform is going to mean a lot of consolidation and costs being driven out of systems.”
The federal law provides subsidies for the uninsured to buy policies, prohibits turning away applicants who have pre-existing conditions, and bars charging the elderly exorbitant rates for coverage, among other changes. Enrollment begins this fall for coverage beginning in January.
Just two weeks ago, Blue Cross and Blue Shield of North Carolina, the state’s largest insurer, blamed the new law for proposed rate increases that are pending before state insurance officials. Hospitals are laying off employees, including a planned elimination of 950 positions at Wake Forest Baptist Hospital, many of them vacant or temporary, as a result in funding cuts in Medicare and Medicaid.
And employers around the country are cutting back employee hours to avoid triggering the requirement to provide insurance coverage now that workers will be able to buy coverage independently through health care exchanges. The Wake County Public School System, for example, announced this month it will limit the hours that substitutes are allowed to work.
The N.C. Hospital Association went on the offensive last month, saying the state’s health care providers are fighting for their economic survival, and warning of financial threats to their industry from cuts in federal and state spending.
WakeMed recently reported a systemwide financial loss of $1.4 million for the first quarter of 2013, after having posted a gain of $2.6 million in the fourth quarter of 2012.
Health care competition had been brewing for years as hospitals seek to expand their patient base and achieve greater bargaining power with insurance companies. Owning a lucrative medical practice gives a hospital access to high-yield patients who require costly surgeries and aftercare.
WakeMed has been on an acquisition spree, buying up doctors offices or signing management deals with medical practices in a strategy of consolidating market share in the Triangle. As a result, the health care system has added some 250 doctors and 500 additional employees in the past few years, including nurses who double as practice supervisors that manage office work flow.
The health care system has absorbed more than 40 practices, including coveted cash cows such as Accent Urgent Care, Carolina Cardiology and Raleigh Cardiology.
When those practices join WakeMed, doctors and other practitioners cease being co-owners of their own businesses and become salaried employees of WakeMed. The practices supply WakeMed with rosters of patients as well as referrals to labs and other specialists that tend to remain within the WakeMed system, generating additional revenue.
But such acquisitions also bring in more practice managers than WakeMed needs.
On Friday, WakeMed notified employees that it is eliminating 31 practice supervisor positions from those doctors offices, and creating 33 new management positions as part of a reorganization. The affected employees in redundant positions can apply for other openings in the WakeMed system.
“The industry is going to wipe out a massive amount of costs,” Atkinson said. “There may be more streamlining.”