PeaceHealth says it will slash 500 jobs amid budget challenges

Southwest Medical Center will see 124 layoffs as its contract with Kaiser ends

By Aaron Corvin, Columbian Port & Economy Reporter and Marissa Harshman, Columbian Health Reporter

Published:

 

PeaceHealth, the Vancouver-based health-care system with operations in three states, said Tuesday it will cut about 500 jobs across its system through a combination of layoffs, unfilled positions and reductions in employee hours as it struggles to slash this year’s budget by more than $130 million.

About 340 of those jobs will be eliminated from PeaceHealth’s Columbia Network, which encompasses Southwest Medical Center in Vancouver and St. John Medical Center in Longview. More than half of those positions, about 177, are layoffs. And Southwest Medical Center in Vancouver will bear the brunt of those layoffs, with 124 people losing their jobs.

PeaceHealth did not provide a date for the layoffs.

Driving the workforce reductions is a confluence of factors, according to PeaceHealth officials: cutbacks in reimbursement connected to federal and state health-care reforms; flat or reduced patient volumes, especially in the Columbia Network, where the upcoming loss of a Kaiser Permanente contract will lead to sharply lower patient volumes; and required investments in electronic health records.

“We are in a time of unprecedented change” in the health care industry,” Rainy Atkins, chief administrative officer for PeaceHealth Southwest Medical Center, told The Columbian. The new cuts, which follow an already aggressive cost-cutting effort, will give PeaceHealth “the right size” for its current workload and position the Catholic-sponsored nonprofit organization for “strong growth,” she said.

In a letter to employees Tuesday, Alan Yordy, president and chief mission officer for PeaceHealth, said the nonprofit remains “financially strong. Yet, with the gap of more than $130 million, we must reduce our costs to continue our commitment to serve everyone with community programs, especially those that provide care for the most vulnerable.”

Yordy said employees directly affected by the cost-cutting effort “will be personally notified shortly.” He said PeaceHealth’s goal is to make cuts to “support and management positions, in order to keep critical staff at the bedside and in (PeaceHealth Medical Group) and ambulatory clinics.”

The Washington State Nurses Association expressed concern over PeaceHealth’s announcement, fearing the workforce reduction would negatively impact patient care in Southwest Washington.

Cuts to hospital staff at the two medical centers “will certainly have an impact on operations and day-to-day care,” said the association in a written statement. “Layoffs to other direct care staff and support staff also greatly impact a nurse’s ability to give each patient the care they need, and WSNA will remain vigilant in advocating against any cuts that take away from care at the bedside.” The association represents 75,000 nurses across the state, including 1,060 nurses at Southwest Medical Center in Vancouver and 430 nurses at St. John Medical Center in Longview.

PeaceHealth employs about 16,000 people in Washington, Oregon and Alaska. In Southwest Washington, about 3,066 employees work at Southwest Medical Center; another 1,000 are at its Shared Services center at the Columbia Tech Center, and another 1,500 work at St. John Medical Center in Longview. PeaceHealth projects operating revenues of about $2.4 billion in its next fiscal year. So the $130 million in targeted budget cuts represents about 5.5 percent of its revenues.

PeaceHealth officials said they’ve been working to boost revenues and slash expenses for some time, including reducing equipment, supply and travel costs. The organization also slowed hiring for all but the most critical positions and deferred compensation increases for PeaceHealth executives.

But to maintain its mission in “this new era of healthcare,” Yordy said in his letter, PeaceHealth must reduce its staff.

Legacy’s gain

The “new era” Yordy cites includes the fact that PeaceHealth took a major financial hit from Kaiser’s decision to cancel its contract with PeaceHealth to provide emergency and obstetric care at Southwest Medical Center for its 100,000 members in Clark County. Effective Oct. 1, Kaiser will contract with Legacy Salmon Creek Medical Center for those services.

PeaceHealth officials have previously said the organization has lost millions not only because of Kaiser’s decision to shift to Legacy but also because of Kaiser’s policy of directing patients to its facilities in Oregon. In his letter, Yordy said the Columbia Network is “facing special challenges, in part with the decision by Kaiser to ‘internalize’ care by moving much of the care of Southwest Washington patients to Oregon.”

Legacy Salmon Creek Medical Center is preparing for an influx of patients once the Kaiser contract begins Oct. 1. The hospital’s average daily census — a patient head count taken at midnight each day — is about 110 people. Legacy officials anticipate that number will increase by about 30 people per day under the Kaiser contract, said Brian Willoughby, a Legacy spokesman.

The hospital’s family birth center and emergency departments will see the biggest increase in patient load.

Every year, Legacy delivers about 2,200 babies. Hospital officials expect that number to increase by about 800 per year with the Kaiser contract, Willoughby said.

In the emergency department, Legacy expects to see an additional 8,000 people each year in its emergency department, which now treats about 50,000 people in a year, Willoughby said.

Frequent questions

In a frequently-asked-questions-and-answers document PeaceHealth issued Tuesday, the nonprofit said it’s not in a fiscal crisis. “Because this is the largest budget gap in recent memory, we are taking it very seriously in order to avoid being in crisis,” PeaceHealth said. The organization said its challenges are similar to those of other nonprofit health systems.

PeaceHealth also spelled out how the expense reductions will occur within Southwest Washington. Of the 340 positions that will be eliminated in Clark County and in Longview:

o 177 are layoffs, including 124 at PeaceHealth Southwest Medical Center in Vancouver; 30 at PeaceHealth St. John Medical Center in Longview; and 23 in shared services functions.

o 114 are full-time equivalent positions that will remain unfilled.

o 49 are full-time equivalent positions that will be reduced “through scheduled hour reductions.”

“We recognize that this will be a disruptive occurrence in the lives of those dedicated caregivers who will be directly affected,” PeaceHealth said in the document. “On a case-by-case basis, we will do all we can to help make the transition to new employment as smooth as possible, treating each individual with dignity, respect and compassion.”

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