The response of the healthcare industry

Absent compelling evidence to the contrary, most assumed that the census information was correct, that the population of the greater New Orleans area was significantly lower. This led to assumptions that the reduced patient volumes were permanent, causing hospitals to scramble to consolidate services and reduce operating costs. Hospital acquisitions became quite commonplace - Ochsner acquiring Memorial Hospital, Meadowcrest Hospital, Kenner Regional Hospital, and entering into operational agreements with several other hospitals (Summa Hospital in Baton Rouge, St. Anne's Hospital in Raceland, and St. Charles Parish Hospital). Children's Hospital acquired Touro Medical Center. Salaries were reduced and benefits were cut. Ochsner Hospital's new policies included charging vacation time during hurricane evacuations, decreasing subsidies for workers' health insurance, eliminating the pension plan, and conducting a full audit of eligibility for health insurance of workers' dependents (ironically this audit occurred shortly before new rules in the health care reform act caused most of these dependents' health care coverage to be reinstated). Executives were affected as well, taking a substantial pay cut. Other hospitals (most notably Tulane Hospital and the state hospital, the Medical Center of New Orleans), took even more severe measures, laying off staff or placing them on furlough, including physicians and tenured faculty. Unfortunately, these cutbacks came at a time when the cost of living in New Orleans had increased dramatically. Destruction of 75% of the housing in Orleans Parish had a predictable effect on the housing market - rents and new home prices skyrocketed. Likewise, house insurance rates increased 3-4 fold, when available at all. Inventory losses and increased demand led retailers to raise prices. Worker attrition rates predictably skyrocketed as well, as high as 20% per year even among the physician staff. Of course, this was by design, as hospitals were trying to reduce overhead by reducing staffing.

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