How Mergers and Acquisitions are Affecting Hospitals in Northeastern PA

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MNA-thumb1We’ve talked before about the mergers and acquisitions trend that is sweeping the country, but we haven’t taken an in-depth look at how this trend is affecting certain regions locally.

Michael Iorfino, reporting for The Times-Tribune, does just that. He writes, “For the first time in at least 23 years, the number of hospital jobs in the Scranton/Wilkes-Barre metro area sank below 9,000. Between just November 2012 and November 2013, employment at general and surgical hospitals dropped from 9,500 to 8,500, the Pennsylvania Department of Labor and Industry estimated.”

This is a decline of 10.5 percent, he adds, “the largest year-over-year drop since 1990” and “marks the sixth straight November in which area hospital jobs decreased or remained flat compared to the previous year. In November 2008, hospital employment in the Scranton/Wilkes-Barre area stood at about 11,000.”

According to healthcare policy and institute fellow at the Urban Institute Dr. Robert Berenson, this is not an uncommon state of affairs around the nation. “In the last 12 to 18 months, hospital systems all over the country have been laying off people, and that includes non-merged entities. There’s just much more financial pressure on hospitals. Layoffs are common.”

Part of the reason why these layoffs are occurring in Lackawanna, Luzerne, and Wyoming counties has to do with the major acquisition of seven hospitals in the region by Community Health Systems. Furthermore, Community Medical Center in Scranton was folded into Geisinger Health System, and “Hazleton General Hospital merged into the Lehigh Valley Health Network.”

Regarding the mergers and acquisitions trend, Berenson observed, “It’s a balancing act of whether it’s in the public’s interest or not. If it’s to remove unnecessary beds and create a more efficient system that requires less labor, that might be in the public’s interest – not for the people losing their jobs.”

According to Iorfino, closures have also affected the region. In July 2009, 179 jobs were lost when Geisinger Wilkes-Barre shut down its inpatient services and ER, while February 2012 brought the closure of Carbondale’s Marion Community Hospital, ending 233 full- and part-time jobs. The year before, Marion’s operating losses totaled $2.6 million.

“In May 2013, Regional Hospital of Scranton stopped admitting children to its pediatrics unit, transferring them to Moses Taylor Hospital – another Commonwealth Health hospital just blocks away,” he continues. “The shift, a sign of the network’s plan to coordinate certain services, stems from the plan to develop a Pediatric Center of Excellence at Moses Taylor. One month later, Moses Taylor furloughed at least 25 of its employees, including two registered nurses. And in July, Regional Hospital of Scranton laid off some of its employees, according to SEIU Healthcare Pa.”

Jim McGuire, Commonwealth Health spokesman, took a rather pragmatic view on the situation, saying, “As care moves out of hospitals, jobs shift accordingly.”

And the news isn’t all bad, Iorfino adds. “From January 2013 to January 2014, both GCMC and Geisinger Wyoming Valley Medical Center saw an increase in employees, Geisinger Health System vice president of human resources Margaret Heffers said. Employment at the Scranton hospital jumped 7 percent, pushing its total number of employees to 1,478 as of Jan. 22… Meanwhile, Geisinger Wyoming Valley Medical Center saw between a 5.5 and 6 percent increase in jobs.”

It should be pointed out, Justin Matus, Ph.D., associate dean at Wilkes University’s Jay S. Sidhu School of Business and Leadership, said, that “the decrease in hospital jobs doesn’t necessarily translate to a dip in healthcare providers. With an emphasis nationwide to deliver more care outside of hospitals, more patients are being treated either at home or health care clinics.”

“Are there fewer jobs in hospitals? Sure.” he stated. “But there are new jobs being created elsewhere.

As healthcare executives, have you undergone a merger or an acquisition recently? How did this process affect your organization and the jobs you were able to provide to your service area? Did the merger and acquisition more readily position you for the future of care delivery to your patient population?

-by Pete Fernbaugh

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