Southwest Washington Medical Center has laid off 30 of its 2,500 employees as part of an effort to cut roughly $32 million from its $462 million budget, a hospital spokesman said Wednesday.
The job cuts, which occurred over the past several weeks, are largely because more and more patients are not paying their bills after receiving care, said Ken Cole, spokesman for Vancouver-based Southwest. It’s a situation caused by the economic recession, which has left many in Clark County without a job or health insurance.
The cuts began in 2008, three years after Legacy Salmon Creek opened its doors in Vancouver. But industry experts said that competition is probably not the primary source of nonprofit Southwest Washington Medical Center’s financial troubles.
Indeed, the new hospital’s parent, nonprofit Legacy Health System, itself froze hiring and cut expenses in 2009, when it experienced budget troubles of its own. It blamed its systemwide financial troubles on uncompensated care and losses in its investment portfolio.
Over the past 2½ years, Southwest has cut roughly $50 million through a number of measures, including renegotiating contracts with vendors of equipment and supplies, leaving noncritical jobs unfilled, and cutting nurses’ hours when patient volumes drop.
Since January, the hospital has also reduced wages, implemented furloughs, frozen travel expenses and initiated early retirements.
This year’s cuts will bring three-year spending reductions to about $82 million by the end of 2010.
The 30 people laid off since June include nurses, certified nursing assistants, pharmacy technicians, medical transcriptionists and diagnostic imaging staff.
The hospital is now conducting an across-the-board financial review to “take a hard look at all those programs that are supporting the community but not necessarily paying for themselves,” Cole said. He said the hospital hopes to avoid more layoffs, “but a lot depends on what the economy does and what our (patient) volumes do.”
In 2009, the hospital cleared $11 million over its expenses, which it then reinvested in operations. It’s a narrow margin, Cole said.
Cole said the hospital has so far lost $3.3 million this year.
“We’ve had some positive months this year and some negative ones,” he said.
The cost of caring for people who have not paid their bills jumped from $26.3 million in 2008 to $39.9 million in 2009, a 52 percent increase.
The cost-cutting measures taken by Southwest come as the hospital’s umbrella organization, Southwest Washington Health System, is in merger talks with PeaceHealth, a Bellevue-based hospital chain. The merger, which officials hope to finalize by the end of this year, is intended to cut expenses, achieve efficiencies and improve and grow services. The merger would create a health company with about $2 billion in revenues, 464 physicians and hospitals from Ketchikan, Alaska, to Cottage Grove, Ore.
Cole said Southwest’s moves to trim its budget have nothing to do with the planned merger with PeaceHealth. “We would be making the same decisions if we weren’t in these affiliation talks,” Cole said, and Southwest’s cost cutting does not endanger the merger.
Southwest is not the only hospital in the state that has been forced to trim its budget and lay off employees because of the Great Recession, said Cassie Sauer, spokeswoman for the Washington State Hospital Association, the nonprofit trade association for hospitals in the state. She said layoffs have occurred at hospitals in cities as diverse as Seattle and Spokane, while others have frozen wages or instituted furloughs.
“Hospitals have had to figure out how to cut their expenses in large part because there are so many more uninsured people because of the economy,” she said. “They’ve lost their health care. That’s putting a lot of pressure on hospital budgets.”
Sauer said she does not believe Legacy Salmon Creek Medical Center’s arrival has affected Southwest’s budget.
“It’s the economy,” she said.