Health care changes result in hospital layoffs

With health insurance somewhat in a state of upheaval, local hospitals are making strategic layoffs in response to national trends and their own patient data.

“It really has to do with a softening of the health care market nationally,” said Kirsten Pfotenhauer, communications manager for Longmont United Hospital. “It’s a shift in the way that people are getting their health care.”

Both LUH and Boulder Community Health announced layoffs in April, with Boulder Community laying off about 25 people and Longmont about 30. Banner Health, which operates three hospitals in Northern Colorado, laid off what it described as “a handful” of employees in January and February. And the largest hospital layoff in the state was in Pueblo where 272 people were furloughed upon shutdown of St. Mary Corwin Medical Center.

Both LUH and Boulder Community said they were responding to trends that are occurring nationally, which include more out-patient services, rather than in-hospital stays, and lower margins of profit on hospital services.

“Moody’s Investors Service, which rates the credit worthiness of companies around the world, recently issued a report declaring that not-for-profit hospitals and health systems are facing more severe financial pressure than what we experienced in the toughest years of the Great Recession,” said Dr. Robert Vissers, president and CEO of BCH, in a prepared statement.

“Our community is relying on us to respond to these challenges while maintaining the high quality of care and access they’ve come to expect from BCH.,” Vissers said. “We are taking action now so we can maintain our financial strength and resolutely pursue our vision of partnering to create and care for the healthiest community in the nation.”

Uncertainty in health insurance doesn’t appear to be helping. In 2013 and 2014 both for-profit and non-profit hospitals saw an inflow of cash, as more and more people were insured, but maintaining profitability became difficult with costs also rising quickly.

Today, hospitals are also faced with more people not being able to afford care or insurance. Meanwhile the Trump administration is cutting the individual mandate (requirement that everyone buy health insurance) and allowing insurance companies to offer short-term health plans that don’t cover pre-existing conditions. Bad debt for hospitals is already rising, Moody reported.

Still it’s not all bad news, Pfotenhauer said, because advancements in the medical fields are allowing the shift toward out-patient service, meaning fewer and shorter hospital stays.

“It’s really great for our patients,” she said. “But with a decrease in the number of people staying in the hospital, we have to shift our resources.”

Pfotenhauer said LUH took a long and hard look at how to deal with these trends, while not decreasing the quality of care and laying off as few people as possible. For instance, rather than running the two wings of the fifth floor as two separate 18-bed units, it is now run as a single 36-bed unit, decreasing staffing needs.

BCH is facing the same issues, according to Vissers’ statement.

“We have started to reduce expenses in multiple ways,” Vissers said. “For example, we will save $1.7 million this year through renegotiating contracts for a range of supplies.    

“In addition to many other measures that reduce operating costs, we had to develop ways to operate more cost-effectively so we can better align employee resources with patient volumes,” he said. “We took a hard look at every position we have, both clinical and non-clinical.  Our analysis led us to eliminate less than 2 percent of our total positions. We expect that many of the employees holding those positions will transition to other jobs available within our organization.  Unfortunately, approximately 25 employees, 1 percent of our workforce, will have to leave BCH, a painful outcome that we deeply regret.”

With health care once again in a state of upheaval, no one at either BCH or LUH were predicting they were 100 percent sure that there will be no more layoffs in the near future. But a prepared statement from LUH indicated administrators there were fairly sure they had stemmed the tide.

“We believe that the staffing changes we have made will make LUH stronger in the long run and will keep us competitive in the changing health care market,” said the statement. “We have a positive future and strong community support. These changes will not affect the distinctively excellent and compassionate health care we provide to the communities we serve. No further cuts are planned for the foreseeable future.”

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