HHS Layoffs to Further Challenge Provider CEOs, Organizations

HHS has begun its seismic reorganization and the implications for providers are far-reaching.

The Trump administration’s decision to lay off 10,000 full-time employees, consolidate HHS from 28 divisions to 15, and combine multiple agencies into a unified entity will have major ripple effects that impact hospitals and health system CEOs.

The Food and Drug Administration is cutting 3,500 jobs, the Centers for Disease Control and Prevention is losing 2,400 jobs, the National Institutes of Health is eliminating 1,200 jobs, and CMS is reducing 300 jobs.

Meanwhile, a new agency called the Administration for a Healthy America (AHA) will combine the Office of the Assistant Secretary for Health, the Health Resources and Services Administration, the Substance Abuse and Mental Health Services Administration, the Agency for Toxic Substances and Disease Registry, and the National Institute for Occupational Safety and Health.

Providers may not feel the toll of the changes right away, but over time, these significant shifts in how HHS oversees healthcare in the country will result in more unpredictability.

Public health concern

The most worrisome potential effect of the HHS reorganization is the worsening of public health with fewer resources dedicated to keeping communities protected from sickness and diseases.

A sicker public, as healthcare witnessed to an extreme extent during the COVID-19 pandemic, places more burden on hospitals to care for patients. It’s not just about more patients being admitted to hospitals, but longer lengths of stay to care for sicker people.

Many hospitals are already dealing with high occupancy rates and a sicker population could accelerate a shortage of beds. According to a recent study published in JAMA Network Open, the average U.S. hospital occupancy rate is 11% higher after the pandemic and unless the hospitalization rate or staffed hospital bed supply changes, the national hospital occupancy rate will reach 85% by 2032, constituting a bed shortage.

Investing in more outpatient facilities would allow organizations to free up beds for patients that really need it and help keep hospital operations from being too bogged down.

Strain on workforce

Many providers are also working hard to keep their head above water when it comes to maintaining a sustainable workforce.

Healthcare workers were stretched thin during the pandemic and although turnover and retention rates have since stabilized, workforce challenges continue to be top of mind for hospital CEOs.

If public health declines, clinicians will be tasked with caring for more patients, potentially resulting in burnout and diminished work-life balance.

In a joint statement by the American College of Physicians, American Academy of Pediatrics, and the American College of Obstetricians and Gynecologists, the provider groups said: “Laying off over 20% of the HHS workforce will not make America healthier, but it will threaten our members’ ability to care for their patients at a time when we need to be strengthening the physician workforce and our national healthcare infrastructure as we confront a growing measles outbreak.”

Even though CEOs can’t fully anticipate how the administration and HHS will act in the foreseeable future, they must be proactive in planning for potential consequences to providers.