St. Charles Health Systems has announced layoffs, buyouts, pay cuts, and other streamlining efforts to plug a budget shortfall of up to $35.0 million. The health system blamed the shortfall on higher costs, lower revenue, and the Oregon State Legislature. These measures have resulted in 30 St. Charles Health Systems layoffs and buyouts to 75 other employees.
The hospital system, like many, has razor-thin operating margins. Hospital officials have attributed the financial challenges to changes with the American Health Care Act and uncertainty over the future of the Affordable Care Act, or “Obamacare.” On top of that, higher cost-sharing requirements from commercial insurance plans have resulted in more unpaid bills.
St. Charles Health Systems is the largest provider of medical care in Central Oregon, with four hospitals and more than 350 active medical staff and 200 visiting medical staff. A private, non-profit Oregon corporation, St. Charles is also Central Oregon’s largest employer, with more than 3,400 caregivers combined in the Bend, Redmond, Prineville, and Madras areas.
The cost-cutting measures will allow the Bend, Oregon-based St. Charles to strive for a 3.7% operating margin in fiscal 2018, thus ensuring that, “the organization can provide safety net services to the community and reinvest in its facilities and people.”
“Although we have made progress in many areas, we know that legislative changes and our shifting payer mix will continue to be problematic as we look at 2018,” said President and CEO Joe Sluka. “We have to adapt to a new reality while still fulfilling our mission to serve all patients—and meeting our obligation to lower their overall cost of care.”
St. Charles Health Systems Layoffs & Cost-Cutting Measures
That new reality entails laying off 30 caregivers.
St. Charles also said it will be:
- Reducing pay of non-contracted salaried caregivers by five percent for at least six months
- Suspending merit increases for caregivers for all of 2018
- Increasing the cost for non-ONA caregivers’ wishing to be a part of the company’s health plan
- Cutting its executive team’s pay by 10% for at least nine months.
In addition to the 30 layoffs, St. Charles also recently completed buyout offers to 72 caregivers. These caregivers have until November 21 to accept the buyout packages offered.
On top of that, St. Charles Health Systems leaders have contacted the Oregon Nurses Association (ONA) requesting a meeting to discuss how, or if, the union will be willing to help during this transition period.
“These are incredibly difficult decisions,” Sluka said. “But taking these steps will save an additional 80 positions and will allow us to stabilize our finances without significantly impacting the services we provide to our community. We asked our caregivers for their ideas on how we could cut costs and many said they would be willing to take a reduction in pay to support the organization. We are grateful for their support.”
Back in August, the cash-strapped hospital system announced another round of cost cutting measures.
“Unfortunately, our performance is not improving at the rate that we had hoped, so we are moving into taking additional steps to ensure that 2017 is a stable enough financial year,” said Jennifer Welander, chief financial officer for the system.
At the time, hospital officials did not announce any layoffs, but did not rule them out down the road. Though their goal is to improve the bottom line by $6 million by the end of 2017.
“We have ground to make up and the $6 million is achievable, but we need to be very, very focused and diligent through the fall,” Welander said.
“St. Charles Health System announces additional cost savings measures,” St. Charles Health System, October 17, 2017.
“Cash-strapped St. Charles cuts back on hiring,” Bend Bulletin, August 28, 2017.