Hospitals began to reverse job losses in June as other healthcare segments surged

• Hospitals have added back 4.3% of the jobs shed in response to the shutdown of elective procedures.
• Physician and dentist offices added the bulk of June’s 358,000 new healthcare jobs.
• Providers have had trouble rehiring some staff who are receiving enhanced unemployment pay.

Hospitals created 6,700 jobs in June, marking the sector’s first increase in employment since March, according to federal data.

The new hospital positions comprised less than 2% of the 358,000 jobs the healthcare sector added that month.

However, the new hiring was the first step hospitals have taken toward recovering some of the 153,000 jobs they’ve shed since March, when many hospitals drastically scaled back elective procedures and other functions in response to the COVID-19 pandemic.

The good news for hospitals may not last, however. As an analysis by the Altarum Institute notes, the pandemic has worsened since the latest employment data were collected.

“The resurgence in cases and further spread of COVID-19 throughout the country are requiring renewed restrictions which will likely interrupt this employment and economic recovery story,” the report states.

For instance, in late June, Texas Gov. Greg Abbott  ordered hospitals in several counties to suspend restarted elective procedures.

Other healthcare employment findings from June, according to the Bureau of Labor Statistics, included gains of:

• 190,000 in dentist offices
• 80,000 in physician offices
• 48,000 in the offices of other health practitioners

Job losses continued in nursing care facilities, with 18,000 positions shed in June. Community care facilities for the elderly lost 1,400 jobs, and other residential care facilities lost 400 jobs.

Hospital responses to the pandemic

Instead of pursuing mass layoffs when California ordered the shutdown of elective surgeries and patient volumes declined by 50%, Eisenhower Health asked employees to take two days off each pay period, said Ken Wheat, senior vice president and CFO. Additionally, a small number of “nonessential” departments were temporarily closed.

Such moves were enough to cover 70% to 75% of the hospital’s revenue shortfall but were difficult to sustain for long, Wheat said.

Nationally, hospitals have added back labor much more quickly than the other costs they cut to offset lost revenue. For instance, Kaufman Hall’s latest tracking report for more than 800 hospitals found labor costs increased by 2% in May, at which point they were 3.3% lower than in May 2019. In contrast, non-labor expenses recovered only by 0.5% and remained 7.3% below their May 2019 levels.

Employment effects on operations

The revenue cycle operations of hospitals and physician practices have endured many job losses during the pandemic, according to several industry observers. Some hospitals cut managers and lower-level staff in their revenue cycle offices as a way to reduce costs when revenues collapsed.

And some providers have found it difficult to hire back the lower-level staff because they qualify for higher-than-normal unemployment benefits through July.

“They are making the same or slightly more staying at home,” said Mel Gunawardena, managing partner at SYNERGEN Health. “That has made it a challenge to hire some of these people back.”

The employees have cited safety concerns about going back to work, so they may not seek to return even after the federally boosted unemployment benefits expire, Gunawardena said. Employment challenges have helped fuel renewed interest in automated revenue cycle alternatives, he added.

Another provider challenge has been the inability of individual physicians to qualify for unemployment funds provided to businesses by the federal government. They have been unable to garner any funds, Gunawardena said, because many individual clinicians use limited liability companies (LLCs) but have not maintained the extensive records required by the federal assistance programs.

“That was an issue that we heard from many of the physicians in the industry,” Gunawardena said. The Trump administration has tried to give physicians more time to collect the needed paperwork by extending the submission deadline to August, he said.

“Before it was always about managing it for tax purposes,” Gunawardena said. “You never knew that it was going to come back where you were going to be given funds or not based on how you managed your individual LLC.”