St. Rita's cuts jobs CEO says 49 workers being laid off in response to economic woes facing hospitals nationwide

Bart Mills

Jul. 10, 2008 (McClatchy-Tribune Regional News delivered by Newstex) -- LIMA -- Tough economic times and a failing medical payment system have forced St. Rita's Medical Center to lay off 49 employees, hospital officials say.

St. Rita's President and Chief Executive Officer Jim Reber announced the cuts during a Wednesday morning news conference. The cuts come from across the hospital's roughly 50 departments, including maintenance, patient accounting, and other support departments. No nurses or direct patient care staffers will be included in the layoffs, Reber said.

"Obviously, our first priority is patient care. We do not believe patient services will be impacted by this decision," Reber said. "We regret having to do this. Layoffs are tough and demanding for all of us. But they are also necessary for us to maintain fiscal stability."

Reber said the cuts are an answer to economic troubles plaguing hospitals across the nation. Growing patient numbers and costs coupled with insufficient reimbursement from federal programs including Medicare and Medicaid make it tougher for hospitals to keep up, Reber said.

"I can take it down to two points: we have more patients ... and less payment per patient," Reber said. "The way we deliver health care in this country is superb. The part that isn't working is the way health care is paid for."

St. Rita's patient count has increased by more than 3 percent in the past year. But demand isn't the only part of the equation, Reber said. Increasingly, those patients are uninsured or underinsured, meaning they depend on Medicaid, Medicare or can't pay at all.

"Four years ago, one in 20 patients were either uninsured or underinsured. Today that's one in 10, so 10 percent of our patients lack insurance or are significantly underinsured," Reber said. "St. Rita's mission is to serve everybody, regardless of their ability to pay, so we take care of them."

The federal government has increased reimbursement from Medicaid, Medicare and other programs by 1 percent to 2 percent a year, but hospital costs are growing by 4 percent to 5 percent. That difference has come to $12 million during the past two years.

Layoffs have been avoided in the past largely because of employee attrition. About 10 percent of the hospital's 3,000 employees typically leave or retire each year. But tighter budgets and shrinking retirement accounts have people sticking around.

"What we've seen, particularly in the last two months, is that our employees are not leaving for other jobs. We also see a lot of people pushing back retirement," Reber said.

St. Rita's is not the only hospital making changes in the face of the current economy. Lima Memorial Health System Human Resources Director Tillie Shiffler said that while the hospital has avoided layoffs, they evaluate staffing on a daily basis.

"Health care volumes are flat nationwide. We're not immune to that. We do evaluate staffing every day because we're driven by that volume," Schiffler said.

St. Rita's employees were told of the layoffs Wednesday morning. Those affected by the cuts will be offered severance packages that include one week of pay for each year of service with a minimum of four weeks and maximum of 13. The hospital has added an extra 30 days pay to that and is offering transition assistance and future bid opportunities for all laid-off employees, Reber said.

The hospital has been the target of layoff rumors for months, with some accusing the administration of stepping back from a promise made in 2004 to add 500 jobs with the construction of its new patient tower. Reber said the two issues are unrelated.

"The cost of buildings is 8 cents of every dollar. Employee costs are 45 to 55 percent," Reber said. "In preparation for opening the tower, we created 512 jobs. We have created more jobs since."

While Reber said he is uncertain that the problems with medical payments will be resolved soon, he hopes other cost-cutting measures will help the hospital avoid future staffing cuts.

"We do not believe there are further cuts coming. We do believe we will need to continue to manage things much more closely," Reber said.

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Newstex ID: KRTB-0111-26560124