Why hospitals lay off employees

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SPRINGFIELD, Mo. – One of Springfield’s largest employers has fewer employees tonight. 

Mercy Hospital announced layoffs as part of a workforce reduction plan to save money. 

What Ozarks First knows so far:  

  • Less reimbursement from Medicare and Medicaid, and increasing labor and drug costs caused the need for restructuring 
  • No word on how many employees have been affected
  • No details on which departments are being impacted 

Dave Dillon with the Missouri Hospital Association says when hospitals are looking to “restructure,’ they’ll do it by laying off employees. 

“More than 50 percent of the costs of running a hospital is in the employees that work in a hospital,” said Dillon. “Hospitals are under tremendous financial pressure. Hospitals in Missouri are hurting right now.”   

He says in a lot of cases, layoffs aren’t happening to departments that deal directly with patient care.  

“It’s not particularly uncommon for hospitals to conduct a reorganization that leads to layoffs and a lot of those tend to be the back-office people that are more administration positions or in billing or in the components for coding,” Dillon said. 

So why do hospitals look like they’re expanding physically and but also letting employees go? 

“Hospitals within hospital systems, even if they look profitable, those hospitals may be subsidizing those other hospitals within that system that are actually losing significant amounts of money,” said Dillon.  

Ozarks First has reached out to Mercy multiple times for an interview but they are not doing interviews right now.  

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