I've received a copy of a long letter distributed to St. Viucent Infirmary Medical Center employees from CEO Peter Banko. The key news is the announcement that recent cost-cutting measures (including reduction in hours for both hourly and salaried employees) haven't been sufficient and further cuts -- perhaps as many as 200 jobs, some vacant and some not -- will be necessary by June 1.
He said services are being evaluated. Some will be cut -- the geriatric psychiatric unit, the Medicare-exempt psychiatric program and surgical ophthalmology by April 1.
The hospital has been hurt, as most have, by a rise in unpaid bills and a decrease in profitable elective procedures.
A hospital spokeswoman said the med center employs about 3,000, but the reduction in hours and cuts have not been imposed on people who work in patient care -- nurses, for example. Otherwise, the cuts have been at every level of abougt 500 support staff and administrative positions, bottom to top, she said.
The fact that patient care is generally exempt -- though some patient care jobs could be at risk in closure of entire units -- means that the future job cuts will be drawn from a relatively small share of the institution's 3,000 employees.
Banko's letter follows:
"There were recent stories printed in the Arkansas Democrat-Gazette and Arkansas Business about the impact of the economy on hospitals in Central Arkansas. As I communicate with my colleagues and friends within Catholic Health Initiatives and elsewhere around the country, they tell a similar story. It is very clear that this once considered “recession proof” industry is being deeply impacted along with every other industry in our country (with the exception of shoe sole repair, heating/air conditioning/refrigeration, auto parts, and other fix-but-not-replace industries).
It is difficult to say whether the work we are doing today at St. Vincent and the personal sacrifices that we are asking you to make are a result of our overall economy or it is work that we should have been doing all along. Over the past four months, we have seen a definite increase in our bad debt and charity care. Over the past two months, we have seen a decrease in our profitable elective procedures (although volume in March has rebounded thus far). Both of these factors combined have impacted our financial performance by $1.3 million per month. Despite some recent positive outlooks on our economy, I think we should reasonably anticipate that these trends will continue for the next 12 to 24 months.
Over the last couple of weeks, you have been asked to either reduce your work week to 36 hours (if you are an hourly employee in support and service departments) or to use 3 days of PTO [unpaid personal time off] in the month of March (if you are a salaried/exempt employee). Both of these measures combined will improve our performance by about $500,000 per month. Although these requests did not come lightly or without considerable deliberation, they are temporary measures that will help strengthen our ministry while we implement more sustainable solutions.
It is, most certainly, unreasonable to all of us to maintain a reduced work week and/or consume PTO just to support the organization over a long period of time. We are currently working on a plan to eliminate an additional 200 positions (both vacant and filled positions) by no later than June 1, 2009. There isn’t one date or time because this work requires detailed analysis, work evaluation, individual evaluation, dialogue, process change, and communication strategies. Some positions will exit the organization sooner (in April) and some later (closer to June 1st) depending on the nature of the changes in the department and position(s). Each position will be individually scrutinized and evaluated using our core values – reverence, integrity, compassion, and excellence – to minimize the impact on direct patient care and the organization as a whole. Once this reduction has occurred, it is my intention to restore all employees back to their regular work hours.
It is important to note that these reductions are only one aspect of a multi-faceted effort under way to explore short- and long-term expense reduction. As I mentioned in a previous communication, we are also turning over every stone with respect to vendor relationships, upfront cash collections, performance of our medical group, length of stay reduction, supply management & utilization, and other areas. Additionally, we are engaged in an extensive review of all of our services and programs throughout the health system. From this review and our strategic plan to focus on our key clinical services, we are closing our geriatric psychiatric unit, Medicare-exempt psychiatric program, and surgical ophthalmology program by April 1, 2009. All of this work over the last 9 months has improved our overall financial performance by more than $1 million per month.
I am also working with our Board and leadership team to look at outside organizations to take a fresh look at our current work at St. Vincent and suggest new opportunities that we have not yet identified. When we’ve been involved in this type of work over the last nine months rather intently, it is easy to get blinders on what can and can’t be done or to go too far without recognizing it. It is important to have others validate our work and help us tackle new endeavors.
There is no reason to panic or be concerned about the financial position or performance of St. Vincent Health System. We are part of Catholic Health Initiatives – the second largest Catholic health system in the country and one of only 14 AA-rated health systems in the country. We have a strong financial position that needs to be solidified going forward. The challenges facing us in the financial arena require some short-term action and long-term thinking. Many of these steps are very difficult and impact our friends & colleagues. It is work that no one likes to do, but we have an obligation to preserve and carry forward the Ministry entrusted to us by the Sisters of Charity of Nazareth over 120 years ago.
I remain committed to transparency and candor about the work we are doing and the decisions we make going forward. We shouldn’t be ashamed of this work or hide behind it or think it will be better if we don’t talk about it. I’m going to tell you what is happening and when it is happening (when the work is done and the dates are firm) and, most importantly, why it is happening. Yes, you can expect the good, the bad, and the ugly.
Our work around our tradition (quality/service), community (people), growth, and accountability/discipline doesn’t go away during these difficult times. We’ve made significant progress in each and every one of these strategic directions over the past year. I’d ask you to stay focused on our ministry, our strategic direction, and supporting those impacted through the decisions that lie ahead. That is how we live our core values and how we will make even more progress together in the days, weeks, and months ahead.
I appreciate all those who have reached out to me via e-mail, phone, and Ask the CEO. Thank you for your support and understanding! As always, if you have any questions or concerns about this work and how we are going about it, please do not hesitate to find me or a member of the executive team.