Sunday, September 22, 2013

Cleveland Clinic Cuts Jobs and Expenses in Response to Obamacare
He hath put down the mighty in their seats.
The Gospel According to Saint Luke
This week when the Cleveland Clinic announced it would cut its operating expenses by 6% by reducing its budget by $330 million and offering 3000 employees early retirement,  When I read this news,   I thought of a personal story.
When I was a pathology resident,  I came down with a case of intense anal itching.   My wife, the pragmatic nurse, said “Maybe you have pin worms.”  I said,” That’s  only for kids.”   I turned to Cecil and Loeb’s textbook of medicine.  Its entry on pinworms began, “Pin worms inhabit the seat of the mighty.”  I had pinworms.
The Cleveland Clinic is a mighty medical institution.  It has a budget of $6 billion and employs 44,000 people.  It is Cleveland’s largest employer and comprises 8% of the economy of northeastern Ohio.  Among America’s best hospitals,  US News and World Report ranks the Cleveland Clinic  number one in cardiology and heart surgery and among the best in 14 adult and 7 pediatric specialties. 
Its president and CEO, heart surgeon Toby Cosgrove, M.D.,   says its budget cuts are largely due to Obamacare.  The Clinic is a willing victim.  It was an early and vocal supporter of the health law, and it foresees that government will sooner or later pay for 75% of health care costs.  Its operating and personnel cuts, the Clinic says, are in pursuit of efficiency and making health care affordable for patients.  Health reform and its ensuing efficiencies, are. in its eyes,  a  necessity.

According to Cosgrove, "There is tremendous anxiety across the entire health care industry right not to understand exactly how these changes are going to be made. and we can't.  We'll just have to wait and see."
The Cleveland Clinics decision is an example of the ripple effect of the health care law.   Overall, the law calls for a 40% reduction in federal expenditures for hospitals and physicians over the next ten years.  This means hospitals and physicians  will have to cut expenses,  to lay off employees, to consolidate, to do whatever it possible to stay within the intent and constraints  of the law.    All hospitals will be effected,   the independent, the small, the rural, the public first, but the most prestigious and largest later. 
As you watch the news,  keep in mind Obamacare impacts on hospitals.   Watch to see how new waves of Medicaid and Medicare patients influence hospital budgets.  
Currently, Medicaid pays 58% and Medicare 82% of private pay.  Somehow hospitals, if they are to stay financially viable,  are going to have to make up the difference.  To do this,  hospitals  will be forced to shift cost burdens to paying private  patients outside government programs. These increased costs will be big part of the legacy of Obamacare.
Tweet:   In response to health reform law,  the Cleveland Clinic  is cutting its $6 billion budget  and number of employees by 3000.

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