Down Economy Injures Local Hospitals

The health care industry is one of the most reliable sources of new jobs in the country. And in cities that suffer from high unemployment, the local hospital is often the biggest employer still standing. But the downturn in the economy has left some hospitals in perilous financial shape. In Waterbury, Ct,, the biggest hospitals are going through a painful process of outsourcing and layoffs.

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For this morning's business bottom line, we stay with health care. The industry has been one of the most reliable sources of new jobs in the country. And in cities even though suffering high unemployment, the local hospital is often the biggest employer still standing. But that is not true everywhere. The downturn in the economy has left some hospitals in perilous financial shape. NPR's Jim Zarroli visited Waterbury, Connecticut, where the city's biggest hospitals are going through a painful process of outsourcing and layoffs.

ELLEN MARANO: So that's for every patient every day.

JIM ZARROLI, BYLINE: At Naugatuck Valley Community College, instructor Ellen Marano is teaching a course for would-be nursing assistants. Many of the students in her class have been looking for work for a while, making do with part-time jobs. They're students such as Becca Wilk, who's hoping this class will be a gateway to a steady career.

BECCA WILK: I know there's always jobs in health care. Unfortunately, people are always getting sick. So you won't have to worry much about a job in this economy.

ZARROLI: Wilk is hoping to get a job at a hospital. She figures they're good places to work.

WILK: They're a big establishment. They probably won't go out of business, probably have good insurance for their workers.

ZARROLI: That's a widely held idea. In the aging Rust Belt city of Waterbury, the two local hospitals are the biggest private employers. And jobs there are seen as highly desirable if only because they're viewed as stable. But that's no longer as true as it once was.

Darlene Stromstadt, CEO of Waterbury Hospital, says the 2008 financial crisis hit institutions like hers hard.

DARLENE STROMSTADT: The first thing that happens is people lose jobs. People who are afraid of losing jobs might make different decisions about the discretionary use of their health care dollar. Fewer people have insurance than had in the past. All of those things have added up together to decrease the pool, if you will, of people that are routinely and regularly coming to hospitals.

ZARROLI: Stromstadt says in bad times the hospital has more trouble recouping its costs. More people go on Medicaid with its low reimbursement rates or stop paying their bills altogether. At the same time, Waterbury is an aging facility and loses paying patients to newer hospitals in the suburbs. As a result, Waterbury lost money over the past five years and had to outsource jobs in housekeeping, food services and transportation. It's also laid off more than 80 people this year at a time when Waterbury has the state's highest unemployment rate.

Senior human resources consultant Sandy Lombardy.

SANDY LOMBARDY: Anytime you have any type of clerical position that's open, it's a large applicant pool. And when you look and prescreen the applications, some people have been out of work two and three years.

UNIDENTIFIED WOMAN: OK, and you'll bring her back to me so I can do her depart.

ZARROLI: The hospital used to offer signing bonuses to get nurses to work in its neonatal unit. But today it's tough to get a job here without highly specialized training. Nurse Donna Duncan says she hears from friends looking for jobs.

DONNA DUNCAN: I tell them look, go online. Look. See, you know, what's available. But there's not usually much.

ZARROLI: Duncan believes this will change soon. Waterbury will have to replace a lot of nurses who are near retirement Sandy Lombardi says after the crash, a lot of employees saw their savings get depleted and put off retirement.

LOMBARDY: I would say between 2008 and 2010, we only had maybe about four people retire, which would be something that you would be like, really? You know, based on the kind of the age of our workforce.

ZARROLI: Earlier this month, the hospital announced it will merge with Nashville-based Vanguard Health systems. An earlier proposed merger with Waterbury's other hospital, St. Mary's, fell through. If this one takes place, Waterbury Hospital will become a for-profit institution. CEO Darlene Stromstadt says the merger will leave the hospital better positioned to grow. Stromstadt acknowledges that some of the steps she's taken have made her less than popular. But she says they've been necessary.

STROMSTADT: We have enormous responsibility to our community. But we also have a responsibility to run our organization tightly and right.

ZARROLI: Stromstadt says the merger with Vanguard isn't expected to cost any more jobs than have already been lost. But the financial pressures facing the Waterbury Hospital are real, and that's being felt in the job market all over the city.

Jim Zarroli, NPR News.

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