(Update: added comments from press conference)
Despite the move, ‘will still end 2022 with a substantial operating loss’
BEND, Ore. (KTVZ) — In the face of skyrocketing contract labor, equipment and supply costs — and stable revenues — St. Charles Health System leadership has announced on Wednesday that it “had made the difficult decision to reduce its workforce” by more than 180 people.
The reduction will affect 105 caregivers through layoffs. An additional 76 currently vacant positions have also been eliminated, the four-hospital system said in a press release, which continues below:
The 105 layoffs – which will take place over the next three days – mainly target non-clinical areas where the organization has discovered, through a benchmarking review process, that it has more staff than others. health systems of similar size.
“Over the past two years, our caregivers have faced and overcome unprecedented challenges in caring for our community, which is why it seems particularly unfair that we now find ourselves in this position,” said the president and CEO. the management of St. Charles, Joe Sluka. “While our financial situation is no different than many other health systems across the country, this decision hurts. These are our people.
Even after taking aggressive steps to address its current financial challenges, which included both cutting spending and identifying opportunities to improve revenue, the health system said it had “haemorrhaged 21 $.8 million through April.” loss.”
The organization’s expenses and revenues began to deteriorate in the spring of 2020, when its contract labor, equipment, and supply costs began to skyrocket along with it being forced to drastically reduce the number of surgeries she performed due to pandemic restrictions and the need to preserve bed capacity to care for critically ill COVID-19 patients.
This imbalance persisted through 2021 as St. Charles saw three major surges in COVID-19 patients – sometimes operating at up to 107% capacity – which made it difficult to resume surgeries to its pre-pandemic level. and other services.
Reimbursement of more than $95 million in federal funds received over the past two years to support its operations has further compounded St. Charles’ financial stress, the hospital system said.
Although the workforce changes the healthcare system is making this week are expected to reduce spending by about $20 million a year, St. Charles said it will still end 2022 with a substantial operating loss. . With a focus on improving the efficiency of its operations, the organization is striving to achieve a positive operating margin by the end of 2023 or the beginning of 2024.
“It took two long years of the pandemic to put us in this situation,” Sluka said, “and it will take us at least two years to get out of it. But we will. And we will continue to take great care of our community now and in the future.
Workforce reductions represent about 4% of the total at Saint-Charles, the region’s largest employer, which had just over 4,500 employees in this year’s ranking of the largest private employers in the Central Oregon Economic Development Region, although this is a reduction from the total of 4,626 caregivers in 2021.
At a press conference with hospital officials, Rebecca Berry, vice president of human resources, said they are “definitely hiring” for other vacancies, particularly nurses and technical staff for acute care needs and the operating room. She estimated that there were about 400 vacancies left after the cuts.
Asked by NewsChannel 21 if further reductions are likely or possible, Sluka said: “Despite our best efforts to reduce expenses, as you can see our costs have continued to accelerate. And we will take further reduction measures. costs over time.
“We’re hoping the impact on our carers is something we don’t have to resort to anymore. But we can never say never about that. … At this point, nothing is planned or nothing on the table, and We hope we won’t have to resort to that again.”
Sluka also sent the following email on Wednesday, titled “Tough times, tough decisions”:
Over the past two years, St. Charles caregivers have worked tirelessly to care for the people of central Oregon when they need it most: during a global pandemic – an unprecedented public health crisis in our lifetime.
They turned a parking lot into a COVID-19 testing site.
They converted an empty conference room into a community vaccination clinic.
They cared for the sickest COVID-19 patients in our hospitals and provided the latest treatments in our clinics.
Along the way, St. Charles — with the support of the community — has done everything we can to take care of our caregivers, so they can take care of you.
All of this, of course, comes at a price:
- Our labor costs have skyrocketed, largely due to our need to bring in expensive contract clinical staff from other parts of the country to help us meet community needs.
- Equipment and supply costs have also increased, as in all industries.
- Our surgery volumes have been down for two years, which means a significant drop in revenue.
- Last but not least, we are now repaying federal pandemic relief funds to the tune of over $1 million each week.
We worked hard to reduce expenses for a few months, and those efforts helped. But they are not enough to get us out of this financial pit. We ended April with a loss of $21.8 million.
We are now at the point where we need to take additional steps to ensure the long-term financial stability of the health care system.
It pains me to tell you that we have to downsize this week. We are eliminating 76 positions that were already vacant, but that is not enough. We are also cutting 105 positions, which will result in layoffs.
First and foremost, it’s not just a number. They are our colleagues and our friends. We are grateful for their dedication to our community and are saddened to see them go.
Over the past few weeks, we have gone through an extensive process in which we benchmarked every area of our organization against industry benchmarks.
Where we fall short of these standards, we need to make changes. In particular, many leadership positions are being cut to align our structures with other health systems of our size.
These reductions are expected to reduce spending by more than $20 million per year.
Still, we will likely end 2022 in the red. It took us two pandemic years to get us into this situation, and it will take us at least two years to recover from it. And unfortunately, we are not alone. Organizations across Oregon and the country face similar financial challenges.
To the communities we serve, I would like to reassure you on a few points:
- We have a responsibility to ensure our community has access to high-quality health care and we are focusing these reductions on primarily non-clinical areas to minimize the impact on patients.
- We are always recruiting and hiring new caregivers to rebuild our workforce and reduce our need for expensive contract labor.
- We are reviewing all of our service lines to ensure that they are financially viable, which could lead to additional changes.
While these decisions are incredibly difficult, we are making them because we are committed to becoming a more efficient and well-equipped healthcare system to continue what we have done for the past 104 years: caring for the people of central Oregon.
As always, we greatly appreciate your support.