Central Georgia Health System, the parent company of The Medical Center of Central Georgia, has laid off about 50 employees as part of a plan to reduce its fiscal 2014 budget to account for potential loss of reimbursements due to health care reform.
Chief Financial Officer Rhonda Perry said Thursday that Central Georgia Health System anticipates potentially $30 million in losses because of reductions in reimbursement of Medicaid, and the job cuts are part of a three-tiered approach to address the shortfall in the fiscal 2014 budget, which begins Oct. 1.
We knew we were going to have to reduce costs and be efficient, and still maintain our quality of health care, she said.
Before the cuts, the hospital was on track to lose about $20 million in fiscal 2013. Perry said that deficit will now be about $6 million, because of the layoffs and other budget-cutting changes.
Perry said CEO Dr. Ninfa Saunders put together a 25-person non-management employee advisory committee and set up a phone line for employees to give cost-saving suggestions. The hospital declined to identify who served on the committee.
The company looked to reduce general costs, cut management and reduce employees as its three-tiered plan, Perry said.
Perry said the hospital will save between $23 million and $25 million in supplies and working with various vendors to reduce costs.
The employee reductions, announced last week, will lead to an additional $9 million in savings. That includes $2.3 million from non-management layoffs, about $1 million in management reductions, and $4.6 million from the elimination of open positions.
The remaining $1 million will come from changes in hours and salary adjustments for some employees.
The cuts were made across several units of Central Georgia Health System, not just the Medical Center, said interim Human Resources Director Bernard Price. The hospital wouldnt specify which departments were affected.
In a statement, Price said the hospital has taken measures to help the affected employees find new jobs.
Most employees were given the notice two weeks before their separation date, he wrote via email. This advanced notice placed their separation date in early October, thereby providing an additional month of health care benefits. All of them were given severance packages based on length of service. In addition, the hospital is helping them find new employment through an outplacement service and all affected employees are allowed to apply for open positions in the company that need to be filled.
Perry said shes not anticipating any similar workforce cuts in fiscal 2015.
Perry said some employees, such as nurses, actually will see raises in 2014 to bring their salaries in line with the general market. Ultimately, by retaining the nurses, it will cut contract labor costs by $10 million to $13 million annually, she said.
The Medical Center isnt the only hospital taking these measures, Perry said. Because of the uncertainty of several aspects of the Affordable Health Care Act, commonly known as Obamacare, hospitals across the country are facing the same challenges.
Weve tried to anticipate and plan (for the changes), but right now, so much is unknown, she said. This year will be fairly chaotic. For (fiscal) 2015, hopefully well be able to plan better, but there are so many unknowns. ... Everybodys not going to have insurance next year, and we have to put in some cushion for that.
Perry said she sees weekly reports from hospitals across the country taking similar actions, about eight-to-10 per week.
Emory (Healthcare) laid off 100 people, she said. Its everywhere.
The new legislation so far hasnt affected other area hospitals to the point of layoffs.
At this point, theres no plan to cut jobs, Houston Healthcare CEO Cary Martin said through a spokeswoman. We do not anticipate any reductions in staffing.
Officials with Coliseum Health System declined to comment Thursday.
Because Georgia elected not to participate in health care exchanges set up by Obamacare, Perry said it means the state wont have the same expanded Medicaid coverage as other states that are participating. The exchanges are federal, state or joint-run online marketplaces for health insurance.
Health care reform isnt the only federal action that has affected the hospitals finances. Perry said sequestration cost the hospital about $4 million -- $1.3 million for the current fiscal year, and about $2.4 million for fiscal 2014.
And that timing hit on the heels when we were going through one of the worst (economic crises), she said.