News Release #13-015 August 6, 2013

FOR IMMEDIATE RELEASE Contact: Krista A. Kittle (315) 785-4504

SMC IMPLEMENTS WORKFORCE RESTRUCTURING PLAN: Proactively Prepares for Impact of Healthcare Reform Mandates
Watertown, New York ----- Samaritan Medical Center announced today a workforce restructuring

plan that will help the organization prepare for changes resulting from healthcare reform. These changes, which focus on treating patients at the appropriate level of care, are causing a shift from inpatient hospital stays to community-based healthcare that relies on the full continuum of care, such as primary care, outpatient care and long-term care. As a result of healthcare reform mandates, Samaritans inpatient admissions are down at the hospital, and there is more demand for services in the long-term care setting. Hospitals and nursing homes across the country are undergoing more significant changes than ever before. Healthcare reform and its associated mandates are forcing all hospitals to look at ways to reduce cost while still maintaining a high quality of care, explains Thomas H. Carman, President and CEO of Samaritan Medical Center. To adjust to this trend and position ourselves to remain a strong healthcare system, we are restructuring staffing across the entire Samaritan system. This is a necessary step in order to proactively manage our budget to remain financially viable and sustain services. In anticipation of these federal mandates, Samaritans Board and leadership team began preparing the organization for these changes as part of the strategic plan that was released in 2012. One of the five strategic goals outlined in the plan is value. This goal ensures that the organization remains focused on how it will adapt and respond to healthcare reform. To achieve this, Samaritan focuses on the two main principles of healthcare reform better patient outcomes while reducing cost. From the quality perspective, SMC is performing extremely well. The organizations participation in state and national quality initiatives is important in continually monitoring the quality of care provide to patients and implementing best practices in those areas. As part of the NYS Partnership for Patient Safety initiative, SMC was recognized for achieving the best-instate for its focused efforts on reducing preventable readmissions. The NYS average is 8.98%, and SMCs rate is 5.62%. -more-

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At the same time that quality of care is being improved, hospitals are also being mandated to find every opportunity to reduce costs. Similar to other hospitals being impacted by healthcare reform, SMC has experienced less hospital admissions, which decreases the revenue that is generated. While revenue is down, hospital expenses are remaining the same or increasing, including staffing, which accounts for over half of the hospitals budget. The strongest performing hospitals in the country maintain salary/benefit costs at approximately 50% of their revenue, continues Mr. Carman. Samaritan is currently at 58.7%. Earlier this year, we implemented a tool to help us benchmark our staffing levels against the best hospitals in the country and adjust to comparable levels to operate as efficiently as possible. As a result, we are restructuring the workforce to adjust to these trends and to position ourselves to remain strong and viable so that we can continue serving the needs of our community long into the future. The workforce restructuring plan is as follows: Approximately 42 staff members will be reassigned into other available jobs within the organization that are currently vacant. The workforce will be reduced by 23 staff members through layoffs. Six management positions and 17 non-management positions are being eliminated. Affected staff and management will be notified over the course of the next three days. ###