Cosgrove: 'Tremendous anxiety' over Obamacare
The Cleveland Clinic will soon cut jobs and up to 6 percent of its $6 billion annual budget, but CEO Toby Cosgrove said Friday the cutbacks are not so much a result of Obamacare as a response to "pressures from business" to reduce health-care costs.
The reforms have, however, created distress among health-care professionals, he said.
"There is tremendous anxiety across the entire health-care industry right now to understand exactly how these changes are going to [be made], and we can't, we'll have to wait and see," Cosgrove told "Closing Bell."
A key part of Obamacare, officially known as the Affordable Care Act, goes into effect on Oct. 1, when states are supposed to begin offering Americans insurance options through online exchanges to compare prices.
Asked by CNBC's Maria Bartiromo whether Obamacare is helping improve or worsen the financial aspects of health care in America, Cosgrove said it's simply too early to tell because the law and its implications are still not fully understood.
There are, however, three headwinds creating the clinic's revenue shortfall of $330 million, Cosgrove said.
To start, he said, insurers are reducing payments to the clinic. Second, the state of Ohio will not see a Medicaid expansion in the year ahead. Third, Medicare is slightly reducing its payments to the clinic.
To reduce its budget, Cosgrove said the Cleveland Clinic has offered "early retirement" to 3,000 employees. Having already made improvements to work flow by reducing waste and increasing efficiency, Cosgrove said the clinic was forced to reduce payroll, which accounts for roughly 60 percent of its expenses.
"It's not totally related to the change in the healthcare law," Cosgrove said. "It is related to pressures from business, pressures from all the way around to reduce the cost of health care. So we are looking at this as a change in the entire ecosystem of the healthcare industry."