The last several months of economic upheaval bring back memories of the 1980s and 1990s when many organizations reduced their workforces in anticipation of payment changes. In the 80s, many hospitals feared the impact of the DRG (diagnosis-related group) prospective payment system for Medicare. In the 90s, managed care swept the country, curtailing or delaying most services.
Headlines in 1996 described nurses as targets for cuts in hospital jobs. Managed care was threatening the bottom line of healthcare organizations. Rapid, chaotic attempts to downsize, right-size, and streamline the workforce led to nurses having less job security and new graduates worrying about a flooded job market.
Today, layoffs are hitting insurance companies and companies that provide support services, such as claims processing. One of the giants, WellPoint in Indianapolis, reported cutting 1,500 jobs. Citing consumer delays in care, increased charity care, and losses of investment income, executives are taking action to preserve the financial health of their companies. They are also coping with payers holding payments, including some states delaying payments to Band-Aid their own ailing budgets.
Caught in the shock wave of the national economic downturn, counties are selling clinics; states are reducing services; hospitals are closing beds; and corporations are consolidating hospitals. Healthcare workers have been laid off in many states, including Arizona, California, Florida, Idaho, Illinois, Maine, Missouri, New York, Ohio, Pennsylvania, Tennessee, Utah, and Wisconsin.
For nurses, however, it’s not so bleak—not yet anyway. In the past, nurses have been relatively recession-proof. During times of job losses, some nurses have actually increased their hours, and others have returned to the workforce. But today, these options are less available.
Today’s healthcare lexicon is filled with references to reassignments, reduction in hours, elimination or freezing of open positions, and furloughs for salaried employees. Reports of reductions in or elimination of new graduate positions and programs are disturbing. Employers acknowledge the shortage of nurses, physicians, and other highly specialized healthcare professionals, yet some are curtailing their hiring of these essential providers. Worse is the elimination of support roles that may lead to increased workloads for those who remain employed.
Layoffs diminish workers’ intellectual capital. And in direct care, that often translates into diminished quality. I hope we learned the lessons of the 90s when a shortage of nurses and a misdistribution of those with specialized experience resulted in unsafe conditions for many patients in hospitals. Layoffs should be a last resort. Organizations needing to reduce costs should turn to their employees as a source of ideas. Asking the opinion of the people who know the work is a good strategic business decision.
If you’re concerned about your job, size up your organization. If you’re in a care-delivery or educational institution, you’re probably more protected than others. But you should still assess your organization’s financial health: Have you seen dramatic changes to reign in costs? If so, prepare to be more flexible with your hours or specialty area. If nursing isn’t the primary product in your line of work, keep an eye out for signs of instability. By all means, follow the general advice for protecting your personal finances during economic uncertainty, too.
The silver lining is that health care remains one of the few sectors experiencing job growth, despite the reported layoffs. The national unemployment rate went from 4.4% in January 1998 to 7.2% in December 2008, yet U.S. Bureau of Labor Statistics reported gains in ambulatory care and hospitals, citing the addition of 372,000 healthcare jobs in 2008.
Chicken Little could never have been a nurse. We won’t be outfoxed by the most recent threat. We will weigh the current events, have the courage to promote the value of the nurse, and offer solutions to help organizations thrive in these challenging times.

Pamela F. Cipriano, PhD, RN, FAAN, NEA-BC
Editor-in-Chief