Health Care Industry Changes Cited in Layoffs at Two Longtime Firms
It has been hailed for increasing coverage, streamlining the delivery of care, and lowering costs. But the Patient Protection and Affordable Care Act, or Obamacare, the federal health insurance law that has generated controversy since its 2010 passage, has also led to the layoffs of dozens of architects at two firms, HDR and Jain Malkin, according to staff.
This past summer and fall, HDR, an Omaha-based global architecture and engineering practice with a large healthcare portfolio, let go 100 people as its hospital commissions slowed, according to company sources. And on November 30, Jain Malkin, which specializes in hospital design and has also been battered by the economy, will lay off all 14 of its employees as its San Diego office closes for good. “Our company has really felt it tightly in the last six months,” says Joost Bende, a Malkin principal, who added that uncertainty about whether the law would be repealed froze many hospitals’ expansion plans for years. Jain Malkin, who founded the firm in 1972, agrees that there was a slowdown in her business stemming from uncertainty in the industry over the fate of the health care law, but she says she planned to close the firm anyway. She has decided to retire from the practice at 68, though she will continue to consult and work on other projects.
Some soon-to-be-ex-employees of the firm, whose California-centric portfolio includes the Eisenhower Medical Center in Rancho Mirage, will land on their feet. Bende has launched a new firm, Pacific 33 Architects, based in San Diego, and he will hire three of those former workers. But, healthcare won’t be his sole focus going forward. Pacific 33 will also take on retail and hospitality projects. “I’ve learned from my mistakes,” says Bende.
HDR’s layoffs, meanwhile, came from the shuttering of five U.S. offices, in Cincinnati; Madison, Wisconsin; Sunnyvale and Sacramento, California; and Rochester, Minnesota. Company officials note that a handful of employees have been relocated to some of the firm’s 39 other architecture offices, which together employ 1,500 people. They also point out that a new architecture office in Los Angeles, scheduled to open in January, and the imminent acquisition of two overseas firms, will result in a net employment gain in 2013.
Yet, HDR admits Obamacare has taken a bite out of its healthcare business, which accounts for about half of its portfolio. To wit: The lawsuits filed by some states challenging the health care law forced many clients to postpone new projects, to see if the law might be overturned. Though it was upheld by the Supreme Court last June, and further solidified by the re-election of its champion, President Obama, in November, the work slowdown took a toll, company sources say. “During the past year to 18 months, we have experienced a decrease in volume of work,” says Doug Wignall, the president of HDR Architecture, in a statement, and “we can no longer support current staffing levels.”
This story has been modified to include Jain Malkin's comments on her firm's closure.