Measures include a reduction in staffing to correspond with lower inpatient volumes, a realignment of critical care services, private rooms for patients, and a new outpatient diagnostic center
CLEARFIELD – As an essential first step in a planned, system-wide restructuring intended to help stem financial losses and right-size facilities in the wake of reduced inpatient volumes and decreased revenue, Penn Highlands Healthcare announced Thursday that it has adjusted its workforce and realigned critical care services at its Clearfield campus.
The health system also announced a return to private rooms for medical/surgical inpatients at Clearfield and plans for a new, outpatient diagnostic center on the hospital campus.
The workforce adjustment will involve full- and part-time clinical, support and management positions at Penn Highlands Clearfield and is designed to bring staffing levels into alignment with reduced inpatient volumes. It will result in elimination of jobs for 30 employees and a reduction in hours for 50 others. In addition, 11 positions that are or soon will become vacant due to previous resignations or scheduled retirements will not be filled.
The health system also announced that, to streamline operations and reduce costs, Penn Highlands Clearfield will no longer maintain a traditional intensive care unit (ICU) but, instead, will begin caring for most patients who previously would have received care in the hospital’s ICU in newly equipped extensive care rooms that will be located on the fourth floor of the hospital. Both actions are outcomes of the health system’s 2015-16 strategic planning process and are designed to help position Penn Highlands Clearfield for the future in a rapidly changing healthcare environment that is negatively affecting hospital and health system bottom lines nationwide.
“When we formed Penn Highlands Healthcare, our mission was to secure, enhance, and expand quality healthcare services in the eight-county region we serve,” said Raymond A. Graeca, chief executive officer, Penn Highlands Healthcare.
“Although we have accomplished much in the areas of enhancing and expanding the primary care and specialty medical services we offer the residents of this region, we have known for some time that we still have some difficult but necessary work to do in securing the future of our facilities. Today’s announcement involving Penn Highlands Clearfield is an essential first step toward that goal.”
Graeca said steep decreases in inpatient volumes, shorter lengths of stay, reduced reimbursement from government and private insurers, dramatic increases in bad debt and uncompensated care, and a sustained shift toward outpatient procedures have significantly reduced hospital revenues. These decreases have not only been seen at Penn Highlands’ facilities, but statewide and across the country. Many of these changes are attributable to Obamacare and have resulted in mergers, acquisitions and the need for hospitals and health systems to fundamentally change the way they do business.
“We’re facing a very different healthcare delivery environment today than we were five years ago, and the American Hospital Association is projecting that the next five years alone will hold more change than we’ve seen in the past 75 years combined,” said Graeca. “Penn Highlands Healthcare is taking the steps necessary to ensure that we are positioned to keep pace with that change.”
Gary Macioce, president of Penn Highlands Clearfield, echoed Graeca’s comments. He noted that admissions at Penn Highlands Clearfield during fiscal year 2014 are down 21 percent over the prior year and are down 53 percent since 2008. Inpatient surgeries are down nearly 18 percent in fiscal year 2014 over the previous year, and inpatient days are down 25 percent during the same period. Macioce said the hospital showed a bottom line loss of $4.7 million in fiscal year 2014 and has experienced a cumulative operating loss of more than $28 million since 2008.
“We simply cannot afford to continue to sustain such dramatic losses,” he said.
Macioce said approximately 65 percent of Penn Highlands Clearfield’s patient revenue comes from government insurers, primarily Medicare and Medicaid. He said payments made by these insurers do not cover the cost of care, requiring the hospital to absorb the resulting losses. He added that the 2013 federal budget sequestration resulted in an additional 2 percent reduction in Medicare reimbursement to hospitals and that this cut alone has resulted in a reduction in payments of $450,000 annually at Penn Highlands Clearfield.
Many of the employees whose positions have been eliminated by the workforce adjustment are covered by collective bargaining agreements. As a result, they have “bumping” rights that give them the option of remaining at the hospital in other positions for which they qualify, displacing workers with less seniority. It may be several weeks until the final outcome of these actions is known.
According to Macioce, the workforce adjustment is expected to result in a savings of approximately $3.1 million this year.
Realignment of the hospital’s critical care services also will reduce costs and streamline operations, said Macioce. He said that, given the hospital’s historically low census of three to four ICU patients daily, it is no longer necessary or cost effective for the hospital to maintain a separate intensive care unit, when the majority of patients traditionally cared for in the hospital’s ICU can receive the appropriate level of care in special, extensive care rooms, which will be located on the hospital’s fourth floor. The opening of this additional seven-bed Medical/Surgical/Extensive Care Unit will free up space on the hospital’s second floor, allowing patients on both floors to have private rooms.
The unit’s extensive care rooms will be equipped with bedside vital signs monitoring equipment that also will report data to a centralized monitoring unit at the nurses’ station, he said.
According to Gary DuGan, M.D., chief medical officer for Penn Highlands Healthcare, the realignment of critical care services will not compromise the quality or safety of patient care.
“All of our patients are triaged in our emergency departments by qualified medical personnel, and the very small number of patients requiring more advanced critical care or access to on-site medical or surgical specialists not available at Penn Highlands Clearfield will be referred, or transferred, to an appropriate facility. This has always been our policy,” said DuGan.
In the months leading up to the workforce adjustment and critical care realignment, the health system implemented several additional measures to help control costs. They included the discontinuation of the obstetrics program at Penn Highlands Clearfield and the consolidation of two medical/surgical floors at the hospital into one, as well as a system-wide freeze on discretionary spending, a delay on non-critical capital purchases, and a hiring freeze for all non-essential positions throughout the health system.
In addition, Penn Highlands Clearfield realized savings in supplies and other operational costs because of its connection with the Penn Highlands system. However, those measures were not sufficient to offset the losses, Macioce said.
“We regret the hardship the affected employees and their families will face as a result of these changes,” said Macioce. “However, these actions are necessary if we are to preserve the financial integrity of the hospital. No one likes change, but not taking such essential action would be irresponsible and would represent a real threat to the continuation of health care services in the Clearfield region.”
Graeca said any information relating to potential workforce adjustments and service realignments at the health system’s other three facilities is still being evaluated. He added that Penn Highlands officials plan to begin sharing portions of the health system’s 2015-16 strategic plan with employees and medical staff at all four Penn Highlands campuses in February.
Graeca noted that the strategic plan includes a number of initiatives designed to expand patients’ access to physician specialists and mid-level practitioners such as nurse practitioners and physician assistants, as well as a range of outpatient service offerings that will be conveniently located throughout the health system, including the Clearfield campus.
“Although some of the methods of healthcare delivery in a post-Obamacare world will look different than they have in the past, the one thing that remains the same is our strong commitment to providing the best possible care to all of our patients, including those in the Clearfield community. Our goal is to ensure that we are always providing the right level of care, at the right time, and in the right place to manage costs responsibly, while delivering top quality care to the communities we serve.”
Graeca said that the new outpatient diagnostic center at Penn Highlands Clearfield will be developed in the Nathaniel D. Yingling, M.D., Cancer Center building offering convenient access to an array of outpatient services including a QCare facility with walk-in, primary care services.