J.K.Wall reports for Independent Business Journal, June 28, 2013, that St. Vincent Health — the second-largest hospital system and the 6th-largest employer in Indiana, with 22 hospitals employing about 17,300 people — announced it will eliminate about 865 jobs to reduce its labor costs by 5%.
The job cuts are to save money as Obamacare (Patient Protection and Affordable Care Act) and Congressional budget cuts promise to take a bite out of hospital reimbursement rates. Obamacare calls for $155 billion in cuts to hospitals’ Medicare payments over 10 years. Then the fiscal-cliff deal on Jan. 1 of this year chopped out another $15 billion. And the budget sequester, which hit March 1, looked ready to sap another $10 billion.
All hospitals are trying to cut expenses drastically, by as much as 25%, in order to prepare for a future they expect to be far more austere than the past. With personnel typically accounting for 60% of hospital expenses, staff reductions are an inevitable part of that process.
But St. Vincent’s layoff announcement is the largest single reduction to date among Indiana’s largest hospitals. People familiar with the cuts said the reductions are heavy in the administrative ranks.
St. Vincent Health’s outgoing CEO Vince Caponi said in a statement: “We know the lives of many people have been affected by our decisions, and we made it a priority to treat all employed and contracted associates with kindness and respect. As these decisions were difficult, we are confident that our ministry will be positioned to continue to lead in the areas of quality, safety and patient experience in service to our communities across the state. We are praying for all associates and their families.”
Dr. Eowyn is the Editor of Fellowship of the Minds and a regular contributor to The D.C. Clothesline.