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Community Health Network, which lost $161 million last year on operations and investments, plans to cut an unspecified number of jobs through a workforce restructuring.
The Indianapolis-based hospital system confirmed Wednesday that it is taking the “unfortunate and necessary step” of making job cuts. It did not say how many jobs would be lost, or how many of them would be in patient care.
Community Health, the third-largest hospital system in the region by number of beds, said it was taking the step in the face of shrinking reimbursements, the rising cost of labor and supplies, and a new state law signed by Gov. Eric Holcomb last week that is pressuring large hospitals to lower prices.
“As a result, we have made the difficult decision to restructure our workforce and make organizational changes that impact jobs,” spokeswoman Kris Kirschner wrote in an email to IBJ. “These organizational changes will take place over time and focus on reducing redundancies and improving efficiencies.”
Community Health employees received an email on Friday from CEO Bryan Mills informing them there would be a reduction in staffing, according to an anonymous posting on Reddit. The Indiana Department of Workforce Development had not posted a layoff notice from Community Health as of Wednesday evening.
Last month, Community Health said income from operations fell 76% last year, to $32.5 million, even as the number of admissions, emergency-room visits, physician visits and outpatient surgeries all increased.
Another big setback was a loss of $196.7 million on investments, largely due to a market downturn. When that was included, along with some other minor gains and losses, the network finished the year with a loss of $160.9 million.
The increase in employee costs was driven by an 8.2% increase in the average hourly pay rate, a 3.2% increase in full-time equivalents due to increase patient volumes, an 8.5% increase in overtime wages, a 98.9% increase in temporary staff wages, a 22.6% increase in staff orientation costs and increased salaries due to various premium pay adjustments, sign-on bonuses and other costs, the network said.
Community Health operates six hospitals in central Indiana with a total of 1,231 staffed beds. Only Ascension St. Vincent and Indiana University Health have more beds in central Indiana.
The Indiana Hospital Association said Wednesday that all hospitals and health systems are looking at some form of restructuring and new efficiency measures, given the strain of the pandemic. It said Indiana hospitals collectively had a negative 2% margin in 2022, and this year has been even more challenging, with some just barely hanging on right now.
“I expect more impacts to be felt this year, and am particularly concerned with reductions in [obstetrics] service availability,” hospital association Brian Tabor wrote in an email to IBJ. “The headwinds of extreme provider shortages, along with rising costs of labor and supplies, aren’t going away soon.”
Community Health did not say when the restructuring would be begin, but said changes were necessary to protect its financial future.
“This is not a decision we take lightly,” Kirschner said. “It is an unfortunate and necessary step to remain a trusted health care system fulfilling our mission of enhancing the health and well-being of the communities we serve.”
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As a Community Health user, I have to say that laying off hospital employees strikes me as an odd (not to mention somewhat unsettling) way to deal with the labor shortages that are driving the rising labor costs.
They made bad investments in the market which, best I can tell, constitute the entire loss they’re seeing. Lost $160 million but lost nearly $200 million in the market.
As a result of those, they’re punishing their likely already-overworked staff by stretching them thinner and giving people who use their hospital system even worse service.
+1
I note that all of the $160.9 million dollar loss was contained in the $196.7 million investment portfolio loss meaning employee based operations offset $ 35.8 million of that likely mostly unrealized paper loss in the investment portfolio due to temporary market conditions . So the CEO wants to punish his employees for conditions far beyond their control.
Looks like the Community investment managers should be the first to go.
Malfeasance seems to describe this situation.
CRT People and HR need to be the first on the pink slip
They shut down their Community TouchPoint operation, which helped A LOT of Seniors in the city. Helped keep them in good health, bus passes, physician visits, food delivery, left several employees without a job, they came in on a Friday, met with employee alone and let them all go. Such a sad thing to see this part of help in the community go away.
I would be curious to know how much of the $196 million investment loss was unrealized (loss in market value) versus realized (loss on sale of investments)? Also, what was the cashflow from operations (positive or negative) and how much of this cashflow is being paid to the highest level executives?
The CRT programs at all these hospitals are costing these systems millions, yet, they keep expanding them.
Please define a CRT program at Community.