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Healthcare: Is It Recession Proof?

I’ve heard people say that healthcare is recession proof. Even when the economy is suffering, people still get sick and need service.

The current recession is entering the third year and it’s finally caught up to the healthcare industry. The latest Bureau of Labor Statistics reports that there were 16 mass hospital layoffs in October, up from 10 in September. Mass layoffs involve 50 or more employees and in the first 10 months of 2010, and 128 mass layoffs occurred. The Bureau projects 12,349 initial claims for unemployment benefits, which surpasses the number in 2009.

What causes mass layoffs? The recession and unemployment has reduced demand for elective procedures and reduced reimbursement from government programs (Medicare and Medicaid). Charity care has also increased and hospitals are adjusting to a lower bottom line by eliminating their most costly item: Employees.

Physicians, too, have noticed a decrease in patients in the office. Doctors who previously had a long wait for appointments are now more available. That’s a good outcome.  But bad debt is soaring. Insurance companies have shifted more first-dollar coverage to employees in the form of high deductibles and co-pays. Neither the patient nor the doctor knows how much the patient’s responsibility will be at the time of the visit. When the bill is finally adjudicated — sometimes months later — it’s increasingly more difficult to collect from the patient. (As an example, I just got an insurance check from an office visit in June.)

Despite these gloomy facts, healthcare remained among the few sectors adding jobs. The healthcare sector grew by 0.2 percent.

*This blog post was originally published at EverythingHealth*


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