Building boom collides with job cuts

Hospitals in Indiana are cutting hundreds of jobs after apparently overbuilding--a phenomenon that has hit other parts of the country as well.

According to WISH-TV, the Indiana University Health system will cut 800 jobs by the end of this year, even though it's added hundreds of hospital beds over the past decade.

Hospital building has been booming this decade, with many facilities and systems spending hundreds of millions of dollars--or even more--to construct new hospitals or expand existing ones.

"From a financial standpoint, they may have overbuilt," Matthew Will, associate professor of finance at the University of Indianapolis, told WISH.

Will added that while demand for hospital services is high, many hospitals are forced to eliminate jobs due to reimbursement cuts from government payers and an anticipated drop in revenues as the Affordable Care Act is implemented.

In California, the two-hospital John Muir Health also reported it would trim a large number of jobs, seeking voluntary buyouts of about 200 employees, the San Jose Mercury News reported. The cuts represent a workforce reduction of about 4 percent. The system also recently sold its laboratory business, eliminating another 540 jobs.

To learn more:
- read the WISH-TV article
- here's the Mercury News article

 

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