Major State Associations Warn Tennesseans to Brace for Impact of Healthcare Cuts

On Sept. 17, the Tennssee Hospital Association released a statement noting Tennessee’s healthcare providers and the communities they serve are bracing for drastic changes in reimbursement that will begin to take effect Oct. 1 this year, and continue a downward trend through 2021.

Changes set to go into effect during the next 12 months include a $93 million cut imposed as part of the Patient Protection and Affordable Care Act (ACA); an $83 million reduction under a 2 percent sequestration invoked in fourth quarter 2011 to begin to address the nation’s budget deficit; reductions of up to 25 percent in Medicare reimbursement to 20 hospitals; and reduction of funding that has helped hospitals adopt new electronic health records technology. 

“To put these reductions in perspective,” said THA President Craig A. Becker, “the total economic impact in the first year will be equivalent to losing a factory of more than 250 jobs in every one of Tennessee’s 95 counties.” Becker went on to point out the impact on jobs and the economy doesn’t even take into account the loss of access to health care that could occur in some areas of the state.  

“We’ve said all along that cost containment is essential to the long-term best interest of our country, but the speed and manner in which these drastic changes are imposed will make the difference between life and death for some hospitals,” he stated.

The American Hospital Association (AHA), American Medical Association (AMA) and American Nurses Association (ANA) last week released a report that estimated the potential impact of the sequestration at a national level could mean the loss of as many as three quarter of a million jobs. For details from that study, please visit
“Congress still has an opportunity to mitigate some of the damage that will be done,” Becker noted, “but the window is closing rapidly.”

Similarly, the Tennessee Nurses Association (TNA) released the following information:
A new report found up to 17,423 healthcare jobs could be lost in Tennessee by 2021 as a result of the 2 percent sequester of Medicare spending mandated by the Budget Control Act of 2011. Nationally, more than 766,000 jobs would be lost according to the report released jointly by the AHA, AMA, and ANA.

The report, produced by Tripp Umbach, a firm specializing in conducting economic impact studies, measures the anticipated effect of these cuts in Medicare payments on healthcare providers and other industries. The Tripp Umbach model reflects how reductions in Medicare payment for healthcare services will lead to direct job losses in the healthcare sector, reduced purchases by healthcare entities of goods and services from other businesses, which in turn, will lay-off workers, and reduced household purchases by workers who lose their jobs. As the impact of these cuts ripples through the economy, jobs will be lost across many sectors beyond healthcare.

“At a time when the need for healthcare is growing, this kind of cut will impact patients' access to care, both in the hospital and community settings. Nurses have always emphasized prevention, wellness and care coordination which are essential for improving patients' health status and providing cost savings,” said TNA Executive Director, Sharon Adkins MSN, RN. “It is extremely short sighted to cut Medicare spending in a way that eliminates healthcare jobs.” 

This model estimates that, during the first year of the sequester, more than 11,279 jobs will be lost in Tennessee. The report found that the job losses will affect many economic sectors beyond healthcare, an industry that has long been an economic mainstay providing stability and growth even during times of recession. The Bureau of Labor Statistics data shows that healthcare created 169,800 jobs in the first half of 2012 and accounted for one out of every five new jobs created this year.