Phoebe Putney Health System said Thursday that it is cutting 127 jobs as part of an organizational restructuring.
These reductions come on top of the 33 “leadership’’ positions eliminated earlier this month by Phoebe Putney, the dominant hospital system in southwest Georgia.
The Albany-based system said the job reduction would lower operating costs by $10 million. Phoebe Putney said in a press release that “some other positions will be transitioned to employment with contracted service providers, giving impacted employees opportunities to fill those jobs.”
A spokesman for Phoebe, Rick Smith, told GHN that the majority of the 127 jobs to be eliminated are not clinical positions. He also said that more than half of them are not currently filled.
Similar staffing cuts are occurring elsewhere in the state and nation, as reimbursement reductions and other market factors put pressure on hospital budgets.
“Like other hospitals and health systems throughout the United States, Phoebe is facing a tidal wave of economic change,” Joel Wernick, its president and CEO, said in a statement. He cited local economies, state Medicaid policies, cutbacks in reimbursements, federal sequestration, and uncertainties related to the Affordable Care Act.
“We’re dealing with an economy and a change in the health care industry over which we have limited control,” Wernick said.
Last month, Central Georgia Health System, the parent company of The Medical Center of Central Georgia, said it had laid off about 50 employees as part of a plan to reduce its fiscal 2014 budget.
And Atlanta-based Emory Healthcare recently said it would lay off about 100 employees due to a restructuring of the organization’s neuropsychology unit at the Wesley Woods Geriatric Hospital.
USA Today reported recently that health care providers announced more layoffs than any other industry last month — 8,128 — largely because of reductions by hospitals, according to the outplacement firm Challenger, Gray & Christmas. So far this year, the health care sector has announced 41,085 layoffs, the third most among industries, behind financial and industrial companies.
Total private hospital employment is still up by 36,000 in the past 12 months, but it’s down by 8,000 since April, and staff reductions are expected to continue into next year, USA Today reported.
Indiana University Health laid off about 900 workers as part of a move to trim its budget by $1 billion over five years, the newspaper reported.
“This is a challenging time for the health care industry,” said Jim Terwilliger, president of two of Indiana Health’s hospitals. “The pace of change is far greater than any time in recent history.”
Much of the job reduction trend is due to lower Medicare reimbursement for services, Craig Savage, a Durham, N.C.-based consultant, told Georgia Health News.
Hospitals in states such as Georgia and North Carolina that aren’t expanding their Medicaid programs may be more affected than those in other states, Savage said. That’s because hospitals’ federal funding for indigent care is decreasing as part of the Affordable Care Act, and those facilities in non-expanding states won’t get the offset of more people being insured under Medicaid, he said.
“Hospitals are also being penalized for [high rates] of Medicare readmissions within 30 days,’’ added Savage, of Ascendient Health Care Advisors.
Private insurers are also holding the line on reimbursements, he said. The job cuts will probably continue “until hospitals can manage [costs] in the current economic environment.’’
Rural hospitals in Georgia already have very lean staffs, said Jimmy Lewis, CEO of HomeTown Health, an organization of rural hospitals in the state. Faced with lower revenues, these hospitals have been cutting services such as obstetrics, he said.
Phoebe Putney, meanwhile, recently emerged from a long-running battle with the Federal Trade Commission over the acquisition of its only hospital competitor in Albany. The FTC challenged the 2011 deal in court, calling it anti-competitive. The case was settled two months ago, and Phoebe retained control of the former Palmyra Medical Center.
Phoebe officials said the current job cuts are occurring across the system’s hospitals and other facilities.
In Thursday’s press release, Wernick added about the job cuts: “We are going through a period of enormous adjustment. One of my greatest disappointments is we were not able to achieve the reduction needed in our labor force through normal attrition.”
In a communication to employees, Wernick said the people who left the organization “are not just our co-workers. They are our friends and neighbors, and it deeply saddens me that this action had to occur. I mourn their loss, as I know you do too. While we all recognize this, we must not lose sight of the reason why we are here. We exist to care for patients. In order for us to continue to care for patients, we must change how we deliver care.”