Hospital To Lay Off Workers, Hires Robots Instead

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]

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