CLEVELAND, Ohio — MetroHealth Medical Center will cut about 400 jobs — 6 percent of its workforce — through a combination of 270 layoffs and the elimination of 130 positions, the hospital told its staff Thursday.
MetroHealth laid off 50 workers in the last several weeks and notifed 194 on Thursday that their jobs would be eliminated. Those job cuts — along with a major institutional reorganization — could save the health system $20 million, according to the hospital.
That money won’t be saved, but likely reinvested in capital projects and other services, MetroHealth Chief Executive Mark Moran said.
“Why is this necessary? Financial results for the first quarter 2009 were break-even, which is not enough to allow MetroHealth to compete, invest and grow,” Moran wrote to the health system’s staff. “Looking ahead, we anticipate higher numbers of uninsured patients and lower reimbursements, so we must reduce costs by eliminating inefficiencies.
“We are functional not glamorous,” he later said in an interview. “The bed towers are 40 years old. We have other reinvestment needs that are pretty significant. You can’t reinvest when you break even.”
Moran told staff in the memo that the jobs being cut are mostly “administrative and support positions.” However, a patient transportation service will be eliminated. Also, 10 licensed practical nurses and another 10 PRN, as needed nurses, will also be eliminated as the health system transitions duties to registered nurses (it will add at least 30 RNs to its current staff of 1,200, Moran said).
“These changes will have no impact on direct patient care,” he stated in the memo.
J.B. Silvers, health systems management professor at Case Western Reserve University’s Weatherhead School of Management, sees MetroHealth’s moves as proactive and wise.
“The fact that they’re the safety-net hospital means they’ve got to be there. They don’t have a choice,” Silvers said. “And they have to have enough cash to provide those services. So I think what you’re seeing is a level of prudence that we probably haven’t seen in an awful lot of organizations, including our banks.”
Moran has said MetroHealth — like most hospitals — is seeing lower patient volumes because of the economic recession and related job losses, which lowers revenues for the hospital. But Silvers thinks the greatest cash-flow problem faced by the Cuyahoga County-owned hospital likely is the “tidal wave of uncompensated care that’s facing them.”
Insurers are ”seeing large numbers of people dropping their health insurance because they lost their jobs and they can’t afford COBRA,” Silvers said. “So we are having a large number of people who are coming off coverage of some sort, and they’re going to be out there still needing health care. Metro is the one they’re going to go to.”
At the same time, Ohio’s hospitals are facing a new franchise fee that is expected to cost them nearly $600 million over the next two years, the Ohio Hospital Association has estimated. So far, hospital lobbyists have been unable to erase the new fee, which is designed to draw more federal stimulus dollars to the state’s Medicaid program, from Gov. Strickland’s proposed budget for 2010 and 2011.
The MetroHealth layoffs are a culmination of economic realities and a massive restructuring at the county-owned hospital. Sixteen clinical departments will be trimmed to seven as several merge with one another. For example, the hospital’s OBGYN and pediatrics departments will be combined and primary care units from the main campus to its community clinics will be managed under one primary care unit. Radiology, pathology, nutrition and pharmacy will all be managed in one unit.
During the restructuring, many employees re-interviewed for jobs left over after the reorganization.
The health system will also as part of the changes eliminate a patient transportation service that takes patients by van from their homes to the main Metro campus on Cleveland’s West Side. That change, in June, will save the health system $1 million, Moran said. He hopes it will nudge some patients toward Metro’s community clinics and public transportation.
“We were transporting people past our community health centers,” he said.
Moran wouldn’t say specifically how MetroHealth would reinvest the money. He said its new medical home program would likely get additional funding and possibly expand its services deeper into city neighborhoods and communities.
“We have a bunch of numerous clinical investment priorities that we’re working our way through to invest in,” he added.
Moran wouldn’t guarantee against more layoffs, but said there wouldn’t be changes on this scale in the future.
“We’re really in uncharted seas,” he said of the economy. “We don’t know what the recession will bring. It prepares us and gives us more breathing room. It allows us to deliver more patient services depending on what comes our way.”
MetroHealth warned workers early this year that layoffs were likely. It laid off more than 100 workers last year and eliminated dozens of unfilled positions.
But it also instituted a series of new programs. It struck a deal with Cuyahoga County to encourage county employees to use MetroHealth in the hopes of adding more paying patients. It also started to enforce a policy that keeps poor and uninsured patients who live outside Cuyahoga County from receiving free care at the facility.
Metro recently launched its first medical homes program, restructured its fees for low-income and uninsured patients and changed the way it manages patients who use the emergency department for non-emergencies.
“Our strategic campaigns are producing positive results, but this kind of transformation takes time,” Moran told employees in March.
The MetroHealth board Moran recently made Moran its permanent CEO. He signed a two-year contract that pays him $500,000 annually with $140,000 in incentives. The terms are the same as his interim agreement. Moran returned the $140,000 he was given last year.
Hospital executives plan to met one-on-one today with 194 employees whose jobs are being eliminated, though some of the employees will stay on for a few of weeks. In addition, MetroHealth has 130 vacant positions that will not be filled and another 26 positions that will become vacant through attrition and will not be filled.
Some of the jobs being cut are part-time.