Bend, Ore.-based St. Charles Health System announced a series of actions Tuesday — including layoffs and pay cuts to the health system's executive leadership team — to compensate for an operating income deficit of up to $35 million during the coming year, according to NewsChannel-21.
In an announcement to NewsChannel-21, St. Charles officials said the health system is "working to close a $25 [million] to $35 million gap in operating income for 2018." The gap, officials said, is the result of "flat to declining revenue[s], inflation on labor and medical supply expenses and reimbursement impacts due to decisions made by the state legislature," according to the report.
"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 St. Charles Health System 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."
As a result of these outside factors, officials will reportedly lay off up to 30 medical personnel this week, and previously offered voluntary separation options to an additional 72 individuals. Those individuals will have until Nov. 21 to accept the buyout packages, the report states.
The health system also implemented salary cuts to various groups of employees. Non-contracted salaried practitioners will see a 5 percent salary cut for a minimum of six months beginning Jan. 28. St. Charles' executive leadership will witness a 10 percent salary cut for a period of at least nine months. It is unclear when the decrease in executives' salaries will go into effect.
St. Charles officials will also suspend merit increases for caregivers in 2018. However, caregivers making less than $30 per hour will receive an up to 3 percent cost of living increase, effective next spring. The suspension will not affect Oregon Nursing Association step and grade increases, the report states. Non-ONA members will also witness an increase in the cost to participate in the health system's healthcare plans.
"These are incredibly difficult decisions," Mr. 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."
Editor's note: Becker's Hospital Review reached out to St. Charles Health System for comment and will update the article as more information becomes available.