Economy, lower reimbursements lead to hospital layoffs
SIERRA VISTA — The staff of the Sierra Vista Regional Health Center was reduced by slightly more than 13.3 percent Friday.
Of the 94 positions eliminated, 59 were active employees and 35 were open and unfilled, according to Jeff Atwood, the vice president of communications for RegionalCare Hospital Partners, the Tennessee-based for-profit medical group with which the former non-profit SVRHC Board of Trustees partnered in January to build a new 100-bed hospital.
The economy, and especially the turmoil in Medicare and state-operated Medicaid programs, as well a federal sequestration, were the major factors in the decision-making process to reduce the current workforce, which totaled 706 people at the time of the force reduction, Atwood said.
The majority of affected employees will receive severance pay and are eligible for continued benefit coverage through COBRA, the federal government’s continued health care coverage program, he said, adding the hospital is providing for outplacement assistance as appropriate for those terminated Friday.
According to Sierra Vista Regional Health Center interim CEO Tom Pemberton, “We made a reduction in force at Sierra Vista Regional Health Center. As you are no doubt aware, hospitals and other health care providers across the state of Arizona and the country are facing unprecedented challenges from the national health care policy changes resulting in reduction in payments and the increase in bad debt.”
Pemberton added, “In planning these changes, which impacted most departments across the hospital, we have been very cautious to make sure that our ability to provide our typical high level of care and compassion to our patients is not impacted.”
Atwood noted of the 59 affected employees, three were registered nurses, of which two were involved in patient care, adding some others were part-time employes or on call workers.
Pemberton said, “Our commitment to serving the people of Sierra Vista and southeast Arizona is not changed; it is simply that we are reacting to the economic pressures felt by all healthcare organizations. We believe that the changes we made today will better position us to meet the challenges that lay ahead.”
Bruce Dockter, Chairman of SVRHC Board of Trustees said: “The last few years have been challenging for hospitals across the state and ours is no exception. As we have said many times actions taken by the State Legislature on AHCCCS (Arizona Health Care Cost Containment System) reimbursement and coverage are putting many rural hospitals and some urban hospitals under financial stress.”
According to Republican Gov. Jan Brewer Spokesman Matt Benson the recent approval of the governor’s Medicaid expansion plan will provide more money for reimbursing hospital stays, which were hit by a 10 percent reduction in payments.
In a June 14 Arizona Capitol Times article, a press statement by Brewer said while the expansion plan doesn’t solve all of the state’s health care challenges “it will extend cost-effective care to Arizona’s working poor, using the very tax dollars our citizens already pay to the federal government.”
The expansion program will help rural hospitals from closing and boost the economy by the eventual creation of jobs, she said.
On Friday, Benson told the Herald/Review the estimated new jobs which will be created in the medical arena is about 21,000.
As part of the savings the state enacted in the past AHCCS reimbursements were cut by 10 percent and the governor’s expansion plan, in which the federal government will provide $8 billion during a three year period, or 100 percent of the cost to add 300,000 Arizonans, currently not covered will also mean the AHCCCS cuts made two yeas ago will be restored, according to the Arizona Capitol Times article.
Benson said since the law has yet to take effect, exactly how increased AHCCCS payments will play out has to wait, but the governor understands the financial crisis facing many hospitals in the state.
While the federal government has agreed to pay the full cost — 100 percent — for three years, and then slowly reduce the amount over a few years to 90 percent, and if the reductions go to 80 percent or below, the state has an opt out provision in the law, Benson said.
However, there is a move afoot to take the new law to the voters in 2014 which could delay the start of the program, he said.
Friday, Arizona legislator Republican Rep. Warren Petersen announced that Saturday morning, a grass root group of conservative legislators and others will kick off a campaign to “put Obamacare expansion to a state-wide voter referendum.”
Benson said such a signature gathering may come to nothing as there is amble state precedence disallowing voter approval of a bill which benefits citizens of Arizona.
When it comes to the employment quandary which was addressed Friday with the staff reductions, Dockter said, “As a local board, we have periodically reviewed the staffing at the hospital and considered changes. It is clear that given the reimbursement and regulatory challenges ahead of us that we had to make these business changes now. These actions are budget driven and not related to the partnership with RegionalCare, but having the support of a partner like RegionalCare is vital in challenging times like this.”
And the SVHRC Board of Trustees “… remains fully committed to the development and construction of the 100-bed replacement hospital. We expect to break ground this fall, begin construction in December, and move in early 2015,” he said.
Atwood said the new hospital has the potential of needing more employees once it is open.
Until then financial realities dictated the need to cut employees, he said.
Plans continue to add medical staff, such as physicians, as a way to provide quality rural health care so people will not go to larger urban areas for their health needs, Atwood said.
The decision to make the cuts was difficult, he said.
Providing the needed health care services is RegionalCare’s mission, Atwood said noting reducing staff is not part of the corporation’s plan.
However, in today’s world of economic reality, reducing hospital staffs is not unusual, he said.
In May, 16 hospitals or medical health groups in the nation cut staffs, according to Becker’s Health Review, an organization which tracts the medical industry.
Atwood said, “You cannot cut your way to success.”
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