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The largest employer in the Toledo area, ProMedica, is hoping to trim costs by reducing staff at its 11 medical facilities, including Toledo, Flower, and St. Luke’s hospitals, by offering some of its employees early retirement packages.
Employees who are 55 years and older with at least 25 years of service are being offered the packages.
Hospital officials sent letters to more than 1,200 employees last week with details of the buyout, which includes: Severance pay up to 26 weeks for each employee based on years of service, health-care benefits through the severance period, and additional contributions to the employees’ retirement plan. They declined to discuss specific compensation packages.
Arturo Polizzi, chief human resources officer at ProMedica, called the voluntary retirement package “rich” and said he expects that many employees who are around the age of 55 will take the package and then get another job.
ProMedica and the other major hospital systems in Toledo have been a dependable and reliable source of jobs. As other companies suffered through the recession and struggled to hire new employees, hospitals continued to grow and expand. Between 2011 and 2013, the number of people employed by ProMedica grew from just over 10,000 to nearly 15,000.
“We are financially strong but we see reimbursements declining [from the federal Medicare and Medicaid programs] that are going to continue to decline so we are being proactive,” Mr. Polizzi said.
ProMedica is not alone. Hospitals across the country are in a period of transition and considering buyouts and even layoffs to cut costs because of financial pressures resulting from changes mandated in the Affordable Care Act.
The Affordable Care Act, also known as Obamacare, has significantly cut reimbursements to hospitals in Ohio through Medicare and Medicaid, said John Palmer, director of public affairs for the Ohio Hospital Association. “Ohio hospitals took a significant hit of $7.4 billion over 10 years,” he said.
“A lot of this had to be done to get uninsured more appropriate health care, but again with cuts to reimbursement, we are just trying to cope as best we can,” Mr. Palmer said. At present, he said, hospitals are reimbursed 83 cents on the dollar from Medicaid.
Mr. Polizzi stressed that ProMedica is seeking to be compassionate to its employees by offering voluntary reductions, whereas many hospitals across the country are using layoffs as a cost-saving tool.
The buyout is being offered to a small percentage of the employee population. He expects a minimum of 400 to 500 employees to accept the package. “With that we would feel comfortable that our expense reductions effort will be successful,” he said.
If the company does not meet that goal, however, it will then regroup and re-evaluate, but there has been no decision made about any future layoff of employees, he said.
Other hospitals in the region have already taken steps to trim costs. According to Crain Communications, the Cleveland Clinic recently announced that it would offer early retirement packages to 3,000 employees and that layoffs could be on the horizon. The hospital is trying to trim $330 million from its budget for next year.
In Michigan, the Detroit Medical Center announced 300 layoffs earlier this year, and the University of Michigan Hospital also laid off 15 managers during fiscal year 2013, which ended June 30.
This time last year, Mercy Health System, which has eight hospitals including Mercy St. Vincent Medical Center and Mercy St. Charles, laid off 38 employees and reduced the hours of 20 others as a part of its plan to reorganize its health-care network under the Affordable Care Act. The employees who lost their jobs were in administrative support, inpatient therapy, and supply management. Some were offered other positions in the hospital.
Every hospital across the state, if not taking action, is at least in discussions on how to cope with the changes, Mr. Palmer said.
Contact Marlene Harris-Taylor at: email@example.com or 419-724-6091.