ELKHART — Elkhart General Hospital has announced plans to lay off employees and cut costs as a counter its growing financial woes.
The hospital issued a press release Friday, stating the sagging economy and reduced payments for services had caused it to miss 2011 budget goals. As a consequence, the EGH plans to eliminate 40 positions either through layoffs or attrition.
“Salary and benefits are the largest expense in a hospital and unfortunately some positions will be eliminated in the revised budget,” Gregory Losasso, president of Elkhart General, stated in the press release. “We estimate approximately 40 positions will be impacted, from a combination of eliminating vacant jobs and layoffs.”
Losasso was unavailable Friday to talk to The Elkhart Truth.
The medical facility recorded a loss for 2011 and turned in a disappointing financial performance during first two months of 2012, according to a letter emailed to EGH employees. Elkhart General blamed the struggling local economy and reductions in payments for services as the cause of the budget problems.
The announcement came about four months after the boards of directors at EGH and Memorial Hospital & Health System voted to merge.
Losasso told employees the hospital expects its recent affiliation with Memorial will result in significant economies of scale and more effectively use its limited resources.
ROADMAP FOR THE FUTURE
Over the next few months, the hospital intends to roll out a new plan that will include some cost cutting and also identifying new revenue sources.
The hospital has already been making efforts to enhance its business, according to the employee letter. Areas EGH is focusing on include:
Ÿ Introducing and growing new programs such as the Bariatric & Metabolic Institute and Thoracic Oncology Clinic.
Ÿ Searching for specialists in the areas of neurology, neurosurgery,vascular surgery, and ear, nose and throat to join the medical staff. Moreover, EGH will be searching for an intensivist, a physician who specializes in the care of critically ill patients, and a hospitalist, a physician who assumes the care of hospitalized patients in place of the individuals' primary care doctors.
Ÿ Improving revenue reimbursements through financial counselors, up-front collections and online bill payments.
Ÿ Combining the IT expertise at EGH and Memorial Hospital.
Ÿ Looking for ways to align purchasing contracts with Memorial to take advantage of better pricing.
Ÿ Sharing best practice information with the Memorial nursing department to obtain higher level of patient satisfaction and care.
Elkhart General stated it missed its 2011 budget goals because of ongoing issues in the local economy coupled with a continued difficulty of securing payments for care and overspending.
“Throughout all of 2011, we faced increasing challenges around reimbursement,” Losasso stated. “The continued high unemployment rate in Elkhart County has a ripple effect on many industries including health care.”
EGH told its employees it anticipates reducing its workforce by 1 percent. At least half of the downsizing will come from worker layoffs and the remainder from unfilled open positions. Staff members who do get laid off will be given a 30-day notice and severance package as well as outplacement services.
Among the other staffing changes, the hospital will define full-time status as working at least 70 hours during a two-week pay period instead of the current 80 hours. In addition, EGH is changing the way it calculates overtime, apparently an attempt to cut the payroll budget.
Also, employees will no longer be able to get a $1,000 discount for having services performed at EGH.
Officials from Elkhart General Hospital and Memorial Hospital of South Bend agreed to meld into a two-hospital system last November. They first announced the proposal in March 2011, and they spent the next few months working out particulars of the merger, which hospital leaders termed an “affiliation.”
The plan generated little negative reverberations in South Bend, but a group of civic leaders in Elkhart had bitterly contested the move. Hospital officials said the merger would let the two nonprofit facilities trim costs, lure new physicians and better coordinate health care. The Elkhart critics, though, feared EGH, as the smaller hospital, would be overshadowed by Memorial, threatening health care offerings here.
Aside from a few personnel changes, hospital officials have revealed little thus far about how affiliation has unfolded. However, they've said a “parent entity” overseen by a unified governing board would manage the two-hospital system while leaders at the respective facilities would manage day-to-day operations of each.
Affiliation critics have maintained a low profile ever since last November's decision.
According to listings compiled by the Greater Elkhart Chamber of Commerce, Elkhart General Hospital had 1,760 employees in April 2011, making it the third largest employer in Elkhart County. That was down from 2,349 in January 2010, when the hospital was the second largest employer in the county.
EGH spokeswoman Tammy Gustafson said the hospital has 1,760 full-time equivalents, but has 2,000 employees.
Truth Reporter Stephanie Gattman contributed to this story.
Elkhart General Hospital financial snapshot
Total revenue $272.0 million $266.2 million
Total expenses $266.8 million $258.3 million
Revenue less expenses $5.2 million $7.9 million
Source: Form 990 filed with the Internal Revenue Service