Hospital To Lay Off Workers, Hires Robots Instead

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hospitals-layoffs-robots

Are robots enabling hospital layoffs? A little.

Is your company feeling the pains of the recession? Robots may be the cure. El Camino Hospital in Silicon Valley is looking to cut expenses, so they’ve invested in 19 Aethon TUG robots. These smart carts can haul supplies around the hospital, making deliveries and pickups at a fraction of the costs of human workers. El Camino recently announced that it would further be cutting costs by firing up to 140 workers from its two facilities in Los Gatos and Mountain View. Coincidence? Yes, mostly, but it’s still a sign that as robots begin to work in human environments, some humans will be leaving.


Credit should be given to Alicia Caramenico at FierceHealthcare who put together announcements in Businessweek and San Jose Mercury News to notice that upcoming El Camino Hospital layoffs come after earlier trials for Aethon’s new Tug robots. We’ve seen Aethon’s TUG robots in action before, and they aren’t meant to replace nurses or other medical staff. The company generally markets them as ‘augmenting’ human workers – giving medical personnel more time to work with patients and less time hauling supplies. But it’s clear that the robots have a cost advantage over human workers doing the same job. According to a hospital administrator quoted in the Businessweek article the 19 TUGs perform $1 million of human labor per year, but only cost $350,000. A 65% reduction in labor costs? That’s very appealing.

So I think we’re likely to see the situation at El Camino repeated often (it may already have been at other Aethon trial locations). A hospital needs to cut costs, so they switch to robot workers for mundane tasks. Then, either as a result of the switch, or because of the same economic pressure, they cut human jobs. Admittedly, the situation at El Camino is complex, and there’s not a one to one robot to human exchange. 19 TUGs should translate to roughly 19 human workers replaced but layoffs are estimated at 140 (a total of 195 people were warned that their jobs were possibly in jeopardy). 15% of those laid off will be nurses and other medical staff, whose talents are far beyond robots (for now). Clearly automation isn’t to blame for all of these jobs lost.

Yet it’s hard to deny that robots are at least enabling some small fraction of these layoffs. As hospital automation improves this trend could increase and not just among the lowest tiers of human workers. We’ve seen pharmacy robots that automate drug dispensaries, and we’ve seen how completely new hospitals could be built from the ground up to incorporate robot workers at many different levels of operation. The hospital of the future is likely to rely more on automation than many would expect, and with fewer humans (per dollar) than currently seen in your neighborhood facility.

Does that mean that hospital workers will be out of jobs? In any other industry I might argue yes. Many jobs are typically going to be lost and humans will be forced into new positions (such as programmer, robot overseer, or what have you). Medicine, however, is such a quickly expanding industry that I think hospital workers will be able to find work for years to come. As the global population ages we’ll need more and more hospitals. Each one will have a smaller percentage of human staff, perhaps, but the total level of humans needed may continue to rise. Jobs may move to new areas, but I think they’ll still be there.

So, it’s likely that we’ll see more cases like El Camino, and it’s likely that we’ll see many disruptive instances as hospitals adopt more automated services. Still, I’m not overly worried for human hospital workers. For the rest of us? Well, the debate on whether full-scale automation will hurt or hinder our economy rages on. I’m optimistic about the whole thing. Cheaper labor, cheaper goods, more humans being able to focus on interesting problems instead of mundane tasks – I think these are all likely outcomes. But whether or not automation makes sound sense for our economy, there’s little doubt that companies will continue to use them to save costs. For many jobs, humans are simply going to be too expensive. That is, until robots form an union.

[image credit: Aethon and SNIS (modified)]
[source: Mercury News, Businessweek, FierceHealthcare]

Discussion — 13 Responses

  • Joey1058 September 3, 2010 on 1:06 am

    I forgot where on the web I read it, but there was an article detailing how the professional medical community have been creating smaller, hands on personal care health facilities. So what I see as doctors/nurses/pharmacists/support people get displaced by robots in large hospital settings, they will increasingly create these types of small, local, (and higher priced) locations.

  • Joey1058 September 2, 2010 on 9:06 pm

    I forgot where on the web I read it, but there was an article detailing how the professional medical community have been creating smaller, hands on personal care health facilities. So what I see as doctors/nurses/pharmacists/support people get displaced by robots in large hospital settings, they will increasingly create these types of small, local, (and higher priced) locations.

  • John Dulchinos September 4, 2010 on 2:02 am

    I am the CEO of 25 year-old American robotics company and a 20-year veteran of the global robotics community. During my career, I have repeatedly been confronted with the myth of robots as job-killers. At first glance at the title of this article, I thought I’d have to dig up the script again. Obviously, labeling robotics as evil and a job taker is not a fair characterization of the value, and good that robotics offer society at large. Robots have provided relief from many dirty, dangerous and dull jobs for decades reducing the number of people exposed to harm and the resulting costs and losses associated with these tasks.

    The new generation of robotics offers the chance to extend this even further: enhancing patient outcomes; protecting our soldiers; reducing the number of miners exposed to dangerous conditions; aiding search and rescue missions; and yes making the United States more productive and competitive in an increasingly global economy. The United States pioneered robotics but lost its leadership to the Japanese and Europeans over three decades ago. The industry generates over $25B in commerce and provides high skill jobs for close to a quarter of a million people, most of which are outside the United States. We are an inflection point in the industry where the United States can regain its leadership.

    Historically robots were simple in function and able to do only simple teach and repeat functions limiting the kinds of tasks that they could perform. Today robots are able to move beyond these basic activities performing more sophisticated and unstructured tasks such as patient rehabilitation, complex surgical procedures, autonomous navigation of vehicles, search and rescue missions and household chores. This transition is being driven by advances in sensing, dexterity, artificial intelligence, computing, material science and other sophisticated technologies that the United States has core capabilities in.

    The healthcare industry is on a collision course with reality. The US spends 4% of GDP on healthcare and the CBO estimates it will grow to over 6% within the next decade. There are shortages of qualified nurses and doctors in many areas around the country and this is just going to get worse as our population ages. Robotics is one of the keys to improving patient care and containing healthcare costs. Improving patient care generally involves increasing the percent of time healthcare workers spend with patients by eliminating the time spent on administrative and logistics activities. This is where robotics can help and what the robots at El Camino Hospital are helping to do.

    Technology has been reshaping the workforce for the past 200 years. In 1870, 75% of the US population was involved in farming. Today less than 2% of the workforce is directly involved in farming yet we generate many times the output per acre than we did at the turn of the century. All those people displaced by tractors, combines, fertilizers and other advancements are the people who led the US industrial revolution and developed cures for polio, small pox, measles and other diseases.

    The automobile displaced many workers in the horse and buggy industry; the computer eliminated many secretarial jobs; the Internet has reshaped the job market in entire industries from retail to publishing to libraries to music to television; and globalization has given rise to entirely new companies and industries. Foxconn, based in Taiwan, is the largest contract manufacturer in the world producing products such as the iPhone and iPad. They employ close to a million workers in Taiwan and China, in jobs that once were based in the United States. Today there are over 1 billion cell phones produced in the world and not a single one is made in the United States. The same with disk drives, computers, flat screen TVs, DVD players, …. Robotics is one of the productivity tools that has the potential to make the US globally competitive again.

    It is a mistake to single out robotics and hold the industry to a different standard than any other technology in the past century. I prefer to look forward to improved standard of quality of life and standard of living that robotics has the potential to provide.

    So to conclude, I hope that your article’s title provides the shock value necessary to get a new audience to read about the economic benefits of robotics. Obviously, no one wants to hear about layoffs, but we must continue to look towards to future, and embrace the good and necessary change that robotics provides.

    • TCG John Dulchinos September 7, 2010 on 2:49 pm

      It’s only good if it is not your job which is deplaced though isn’t it?

      Robots may not have been job killers but they certainly are today. The 1990s recession for me was a piece of cake. I got a low paid bread factory job. It wasn’t interesting but enabled me to keep my head above water. 2004 this factory went robot. Therefore 100+ workers were laid off, ok so they can retrain… except robotisation of society is happening everywhere therefore less people needed overall.

      This along with standardisation and homoglation of processes means that jobs vanish…

      Ask yourself this, do robots buy consumer goods? If all your workers are laid off then who will have money to buy your manufactured stuff?

      Currently we place this economics problem under the file of somebody else’s problem. But outsourcing and automation mean you are forever chasing ever dimishing circles.

      The UK town I live in never recovered from the factory closures of the 1980s, we have 45% structutal unemployment. In some mining towns the unemployment is closer to 90%

      • Paradigm Shifter TCG September 7, 2010 on 4:50 pm

        Well, we will soon need to shift to a saner economic paradigm which embraces automation rather than puts people at odds with it.

        We need to rethink the whole concept of “work.” If everyone could work only 4-6 hours a day and not see a decrease in wages, that would help mitigate a the negative effects of job displacement by effectively spreading the availability of labor hours around a bit. The eight hour workday should be a think of the past.

        As a society will we be able to actually enjoy the fruits of our technology or continue to stick to pre-industrial, non-scientific notions of what constitutes “work.”

  • John Dulchinos September 3, 2010 on 10:02 pm

    I am the CEO of 25 year-old American robotics company and a 20-year veteran of the global robotics community. During my career, I have repeatedly been confronted with the myth of robots as job-killers. At first glance at the title of this article, I thought I’d have to dig up the script again. Obviously, labeling robotics as evil and a job taker is not a fair characterization of the value, and good that robotics offer society at large. Robots have provided relief from many dirty, dangerous and dull jobs for decades reducing the number of people exposed to harm and the resulting costs and losses associated with these tasks.

    The new generation of robotics offers the chance to extend this even further: enhancing patient outcomes; protecting our soldiers; reducing the number of miners exposed to dangerous conditions; aiding search and rescue missions; and yes making the United States more productive and competitive in an increasingly global economy. The United States pioneered robotics but lost its leadership to the Japanese and Europeans over three decades ago. The industry generates over $25B in commerce and provides high skill jobs for close to a quarter of a million people, most of which are outside the United States. We are an inflection point in the industry where the United States can regain its leadership.

    Historically robots were simple in function and able to do only simple teach and repeat functions limiting the kinds of tasks that they could perform. Today robots are able to move beyond these basic activities performing more sophisticated and unstructured tasks such as patient rehabilitation, complex surgical procedures, autonomous navigation of vehicles, search and rescue missions and household chores. This transition is being driven by advances in sensing, dexterity, artificial intelligence, computing, material science and other sophisticated technologies that the United States has core capabilities in.

    The healthcare industry is on a collision course with reality. The US spends 4% of GDP on healthcare and the CBO estimates it will grow to over 6% within the next decade. There are shortages of qualified nurses and doctors in many areas around the country and this is just going to get worse as our population ages. Robotics is one of the keys to improving patient care and containing healthcare costs. Improving patient care generally involves increasing the percent of time healthcare workers spend with patients by eliminating the time spent on administrative and logistics activities. This is where robotics can help and what the robots at El Camino Hospital are helping to do.

    Technology has been reshaping the workforce for the past 200 years. In 1870, 75% of the US population was involved in farming. Today less than 2% of the workforce is directly involved in farming yet we generate many times the output per acre than we did at the turn of the century. All those people displaced by tractors, combines, fertilizers and other advancements are the people who led the US industrial revolution and developed cures for polio, small pox, measles and other diseases.

    The automobile displaced many workers in the horse and buggy industry; the computer eliminated many secretarial jobs; the Internet has reshaped the job market in entire industries from retail to publishing to libraries to music to television; and globalization has given rise to entirely new companies and industries. Foxconn, based in Taiwan, is the largest contract manufacturer in the world producing products such as the iPhone and iPad. They employ close to a million workers in Taiwan and China, in jobs that once were based in the United States. Today there are over 1 billion cell phones produced in the world and not a single one is made in the United States. The same with disk drives, computers, flat screen TVs, DVD players, …. Robotics is one of the productivity tools that has the potential to make the US globally competitive again.

    It is a mistake to single out robotics and hold the industry to a different standard than any other technology in the past century. I prefer to look forward to improved standard of quality of life and standard of living that robotics has the potential to provide.

    So to conclude, I hope that your article’s title provides the shock value necessary to get a new audience to read about the economic benefits of robotics. Obviously, no one wants to hear about layoffs, but we must continue to look towards to future, and embrace the good and necessary change that robotics provides.

    • TCG John Dulchinos September 7, 2010 on 10:49 am

      It’s only good if it is not your job which is deplaced though isn’t it?

      Robots may not have been job killers but they certainly are today. The 1990s recession for me was a piece of cake. I got a low paid bread factory job. It wasn’t interesting but enabled me to keep my head above water. 2004 this factory went robot. Therefore 100+ workers were laid off, ok so they can retrain… except robotisation of society is happening everywhere therefore less people needed overall.

      This along with standardisation and homoglation of processes means that jobs vanish…

      Ask yourself this, do robots buy consumer goods? If all your workers are laid off then who will have money to buy your manufactured stuff?

      Currently we place this economics problem under the file of somebody else’s problem. But outsourcing and automation mean you are forever chasing ever dimishing circles.

      The UK town I live in never recovered from the factory closures of the 1980s, we have 45% structutal unemployment. In some mining towns the unemployment is closer to 90%

      • Paradigm Shifter TCG September 7, 2010 on 12:50 pm

        Well, we will soon need to shift to a saner economic paradigm which embraces automation rather than puts people at odds with it.

        We need to rethink the whole concept of “work.” If everyone could work only 4-6 hours a day and not see a decrease in wages, that would help mitigate a the negative effects of job displacement by effectively spreading the availability of labor hours around a bit. The eight hour workday should be a think of the past.

        As a society will we be able to actually enjoy the fruits of our technology or continue to stick to pre-industrial, non-scientific notions of what constitutes “work.”

  • Afterthought September 5, 2010 on 4:58 pm

    Mr. Dulchinos, if your robots aren’t job killers, then you’re doing it wrong.

  • Afterthought September 5, 2010 on 12:58 pm

    Mr. Dulchinos, if your robots aren’t job killers, then you’re doing it wrong.

  • מצלמות אבטחה September 5, 2010 on 9:18 pm

    Yes the idea is to cut down on jobs…

  • מצלמות אבטחה September 5, 2010 on 5:18 pm

    Yes the idea is to cut down on jobs…

  • SaintWells June 24, 2011 on 12:46 pm

    Surely the robots do not stretch tea breaks or acclaim propriety as their right to use or take home , a good move to make , I am so tired of staff , I wish I could have a auto replacement for the lot .
    Now when can we get a robot to replace the wall sustaining , gum chewing semi retard and ignorant security staff that is so irritating and unreliable.