Datestamp: 05/11/2012

Hospital may cut 150 jobs

Effect on local economy 'significant'

Salem Hospital could eliminate as many as 150 fulltimeequivalent positions in the next two to four months as it continues to struggle with low patient volumes, CEO Norm Gruber told employees Thursday. This follows a move in February to cut spending by $30 million for similar reasons. At that time, 30 full and parttime positions were eliminated and 30 open positions were not filled. Persisting issues with low patient volume have reduced Salem Hospital's cash flow to 31.4 percent below what was budgeted, Gruber wrote in the letter. Cash flow is what the nonprofit hospital uses to invest in capital projects and technology upgrades. "Because our overall revenue has declined, our ratio of labor costs to net revenue is out of balance," he wrote. "What this means is we have too much labor for our current volume of activity." This is the fourth and largest round of cuts Salem Hospital has made since October 2009, when it announced losses for the first time in nine years. And it's the second one this year. The job losses will be another blow to the local economy. Earlier this year, Salem was jolted when Holiday Retirement announced plans to move its corporate headquarters and 180 jobs to Lake Oswego. The company, which was founded in Salem, ranks among the nation's largest providers of senior housing. Losing the equivalent of 150 hospital jobs in a market the size of Salem is a "significant," said Pat O'Connor, a regional employment economist who follows trends in the MidWillamette Valley. "The slowdown in the economy seems to have finally caught up with health care," he said. Spokeswoman Sherryll Hoar said the hospital doesn't have a dollar amount to cut. Rather, it's looking to achieve a certain balance between labor and revenue. Salem Hospital specifically has seen decreased volume in the operating room, laboratory, critical care, Hospital may cut 150 jobs 1

pharmacy, angiography and respiratory care, according to Gruber's letter. Previously eliminated jobs have come from the management ranks, but this time the hospital isn't focused on those positions, Hoar said. The positions likely will come from a mix of the specific programs and services that are seeing decreased volume, as well as the programs that have been operating at a loss regardless of volume, because of the amount of charity care the hospital provides, Hoar said. Hoar said the hospital also will factor in community needs and other local providers' services in the decisions, meaning that some programs could be eliminated. "Over the years, we have maintained services at a loss for no other reason than our mission to improve the health and wellbeing of the people and communities we serve," Gruber wrote. "We have been able to afford this by profitability in other areas. But, as the profitable areas become fewer and fewer, we are faced with making these difficult choices." Hospitals across the state have been facing similar challenges. Providence Health & Services, Legacy Health and PeaceHealth recently have made cuts. Good Samaritan Regional Medical Center in Corvallis has announced job cuts, O'Connor said. A combination of cuts in Medicaid reimbursement rates and the slow economy keeping people away from hospitals are to blame, leaders say. Employees who lose their jobs will be eligible for the Salem Health redeployment program, meaning they could pursue an open position within the organization for which they qualify. Reporter Michael Rose contributed to this story. syoo@StatesmanJournal.com, (503) 3996673 or follow at Twitter.com/syoo Timeline of hospital cuts October 2009: Salem Hospital announced losses for the first time in nine years. It cut about $9.3 million in spending, including an equivalent of 43 fulltime positions. April 2011: Salem Hospital announced plans to make $7.6 million in cuts, including 16 management positions. February: Salem Hospital made $30 million in reductions, including about 30 full and parttime positions. May: Salem Hospital announces that it could eliminate as many as 150 fulltime equivalent positions. Online Read this story at StatesmanJournal.com/news to read a letter that Salem Health CEO Norm Gruber sent to employees Thursday.

Hospital may cut 150 jobs

Caption: Salem Hospital is planning its fourth round of cuts since October 2009. DANIELLE PETERSON / Statesman Journal file Section: Page one Page: 1A Byline: Saerom Yoo Source: Salem From: Yoo, Saerom

Hospital may cut 150 jobs