Citing Financial Losses, St. Charles Health System Lays Off Staff

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St. Charles Health System is laying off 105 workers this week as the central Oregon provider grapples with a buildup of rising costs and pandemic-era losses. 

St. Charles officials on Wednesday announced the layoffs will happen over the next three days. The company is also eliminating another 76 positions that are vacant, bringing the total number of trimmed positions to 181. 

Hospital officials said the system lost $21.8 million through April, the equivalent of a 6.7% operating loss. The losses came through a combination of increased labor costs, such as traveling health care workers, and the cancellation of elective surgeries during the pandemic to preserve bed capacity, which hurt revenue. St. Charles made the decision to lay people off after it attempted to bring its finances under control by cutting in other areas like travel and supplies and looking for alternative revenue sources. 

“We worked very hard to avoid taking this step,” said Joe Sluka, CEO and president of St. Charles Health System. “But .. the changes that we have made so far are simply not enough to get out of this financial hole that COVID 19 pandemic has caused.” 

He added: “Taking this step has been an absolute last resort and unfortunately we are now at that point.” 

St. Charles Health System has about 4,500 employees at its hospital in Bend, hospitals in Redmond, Prineville and Madras, and clinics in central Oregon. Hospital officials said the layoffs would be across the system but declined to provide breakdowns among facilities because employees have not yet been notified.

St. Charles’ executive team broke the news to employees in a memo Wednesday.

“St. Charles leaders had hoped to be able to turn the organization around through expense reductions and revenue enhancements that would not affect our people or the services we provide,” the memo said. “However, we are now at the point where we must take additional action to ensure the long-term financial stability of the health system. It is with great sadness that we announce reductions in our workforce.”

The layoffs are primarily non-clinical jobs and these include areas like information technology, financial services and human resources.

However, the layoffs will not result in any service closures in the system, said Dr. Jeff Absalon, the health system’s chief physician executive. 

Rebecca Berry, vice president of human resources, said the laid-off employees will receive severance packages and assistance and coaching in finding other employment. 

The layoffs also come amid shortages in the health care workforce nationwide. For that reason, St. Charles Health System is recruiting nurses and health care workers for its hospitals even as it lays off staff elsewhere in the system. 

Matt Swafford, chief financial officer of St. Charles Health System, said this year’s losses of $21.8 million through April would have reached $29.3 million if the system had not received provider relief funds through the federal CARES Act. 

Since the fall of 2020, St. Charles Health System has dipped into its long-term reserves, pulling out $65 million, Swafford said. That’s about 10% of the hospital’s portfolio.

St. Charles’ financial challenges also include the repayment of $95 million in federal funds it received during the pandemic to support its operations.

“After two years of diminished surgery volume and increased expenses for responding to COVID surges, which just abated … it's taken a huge financial toll,” Swafford said.

Officials said the system has taken steps to ease its way out of the hole gradually. For example, it refinanced $75 million of bonds that were supposed to come due in 2023 and 2026. Those bonds won’t come due until 2032, a move that buys the hospital time to reshape its finances. 

Hospital officials estimate the layoffs will save the system about $20 million in expenses annually. Even with that cut, St. Charles officials anticipate that 2022 will end with an operating loss. The hospital has the goal of turning a profit by the end of 2023 or early in 2024.

You can reach Ben Botkin at [email protected] or via Twitter @BenBotkin1.

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Comments

St. Charles layoff of 105 employees will save $20M.

This comes to $190,000 average cost for each employee per annum. Average RN pay is $100,000, which leaves about $90,000 payroll costs such as health care, workers comp, etc. It seems a bit inflated. 

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