Penn Highlands Healthcare announced Thursday that it has completed the last phase in a system-wide restructuring process by adjusting its workforce at its Brookville and DuBois campuses.
In the previous two months, similar layoffs were completed in Clearfield and St. Marys to help stem financial losses and right-size facilities in the wake of reduced inpatient volumes and decreased revenue.
Just like the other workforce adjustments, those in Brookville and DuBois involve full- and part-time clinical, support and management positions and are designed to bring staffing levels into alignment with reduced patient volumes and national staffing trends.
The system imposed a hiring freeze in October 2014 to defer hiring positions that were not immediately necessary for the operation of the hospitals. These already vacant positions were accumulated over the last six months at both hospitals to help decrease the total number of employees who are affected by this workforce reduction.
In Brookville, it will result in elimination of jobs for 15 employees and a reduction in hours for 9 others. In addition, 11 positions that are or soon will become vacant due to previous resignations or scheduled retirements will not be filled.
In DuBois, it will result in elimination of jobs for 33 employees and a reduction in hours for 13 others. In addition, 90 positions that are or soon will become vacant due to previous resignations or scheduled retirements will not be filled.
The actions at all four hospitals are an outcome of the health system’s 2015-16 strategic planning process and are designed to help position Penn Highlands Healthcare for the future in a rapidly changing healthcare environment that is negatively affecting hospital and health system bottom lines nationwide.
“Penn Highlands Healthcare has been forced to make tough decisions at all of its facilities in an attempt to combat reductions in reimbursements and declining volumes in many areas,” said Raymond A. Graeca, chief executive officer, Penn Highlands Healthcare.
“With this phase of our restructuring completed, we can now begin implementing our strategic plan which we believe will strengthen our system, build upon our foundation of quality care and bring unprecedented access to primary care and specialty providers to the residents of our eight-county region.”
Graeca reiterated that the changes happening within the Penn Highlands system are happening throughout the country. “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 been seen locally, 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.”
Julie Peer, president of Penn Highlands Brookville, echoed Graeca’s comments. She noted that admissions at Penn Highlands Brookville during fiscal year 2014 are down 28 percent over the prior year and are down 48 percent since 2009. Inpatient surgeries are down by 76 percent, and inpatient days are down 34 percent during the same period.
As a result, Penn Highlands Brookville has experienced operating losses in 2 of the last 5 fiscal years, totaling $1.2 million.
At Penn Highlands DuBois, reduced reimbursement from insurance companies and increases in uncompensated care and other factors, have caused the facility to experience operating losses in 3 of the last 5 fiscal years totaling $8 million.
“Losses in operating revenue simply are not sustainable and cannot be permitted to continue,” said John Sutika, president of Penn Highlands DuBois.
He added that approximately 54 percent of the Penn Highlands DuBois 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 hospitals 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 $1.8 million annually at Penn Highlands DuBois.
Penn Highlands Brookville is also affected by the 2 percent reduction and takes an annual hit of $245,000 to its bottom line.
According to officials, the workforce adjustment is expected to result in a savings of approximately $1.2 million annually at Penn Highlands Brookville and $5.0 million annually at Penn Highlands DuBois.
Individuals affected by the workforce adjustment will be referred for unemployment compensation. Former employees will be encouraged to use the services of CareerLink, the employment resource center established by the Commonwealth of Pennsylvania to assist individuals with the employment transition process.
In the months leading up to the workforce adjustment, the health system implemented several measures to help control costs. These measures include a hiring freeze, which allows only mission-critical positions to be filled; a requirement that all overtime hours must receive prior approval; and a freeze on all discretionary spending.
In addition, Penn Highlands Healthcare realized savings in supplies and other operational costs because of system-wide group purchasing program. However, those measures were not sufficient to offset the losses according to officials.
“While this is an outcome no one wants, reducing staff to match patient activity and national staffing trends is necessary for the long-term health and strength of our hospitals,” Sutika said.
“All of our employees make important contributions to the hospital, and those affected by this decision are no exception. We deeply regret the hardships they and their families will bear. However, not taking such essential action would be irresponsible and would represent a real threat to the continuation of health care services in our region.”
Graeca said that the changing healthcare landscape makes it hard to make a definitive statement about future workforce adjustments but believes that the workforce restructuring is now complete and the system will be able to move forward with service realignments at all of the health system’s facilities.
He added that Penn Highlands officials have shared portions of the health system’s 2015-2016 strategic plan with employees and medical staff at all four Penn Highlands campuses.
Graeca noted that the strategic plan includes a number of initiatives designed to expand patients’ access to physician specialists and advanced practice providers 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.
This also works in relationship with current construction projects that will help as the demand for healthcare services shifts from inpatient care in the hospital setting to outpatient care in physician offices and urgent care centers.
He said that the workforce reductions and the building projects may seem to be contradictory but with the changing healthcare landscape, these initiatives are happening throughout the country. Health systems are redesigning their workforces to meet the outpatient needs and creating more efficient facilities to open up access for the new demand on outpatient services.
“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 Brookville/DuBois regions. 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.
In the coming months, Penn Highlands Healthcare plans to launch several initiatives that will help redefine the hospitals’ mission, improve customer service, enhance quality and increase access to care. These plans include:
- Develop a Quality Improvement Committee and a system-wide Performance Improvement Plan in an effort to demonstrate performance that exceeds benchmarks in quality and patient safety.
- Recruit additional physicians and advanced practice providers through an aggressive recruitment effort to expand access to both primary care and specialty providers throughout the eight-county region.
- Work to reconfigure service lines to ensure convenient access to primary, community-based health care. The system plans to add six new primary care clinics/QCare urgent care centers including ones currently under construction in DuBois and Philipsburg.
- Develop strategies to stabilize providers and improve the patient experience and timely throughput in the four hospital emergency departments.
- Develop a Graduate Medical Education program and expand educational opportunities for regional medical schools and advanced practice provider programs.
- Create system-wide plans for certain service lines such as OB-GYN, general surgery, orthopedic surgery, urology, behavioral health, etc.
- Create a system-wide information systems plan.
“Although Penn Highlands Brookville and Penn Highlands DuBois are changing, one thing remains the same, our strong commitment to providing the best possible care to all patients. We have served our communities for more than 100 years, and with the fulfillment of our strategic planning, we believe Penn Highlands will to continue doing so for many more,” Graeca said.