St. Charles president-CEO defends layoffs, pay cuts

(Comments from president-CEO, nurses union)

St. Charles Health System announced layoffs, pay cuts and other measures Tuesday to cover an operating income shortfall of up to $35 million for the coming year that it blamed on higher costs, lower revenue — and the Oregon Legislature.

President and CEO Joe Sluka, who was only available by phone, told NewsChannel 21 there will be no impacts when people go to the emergency room, for example.

“The layoffs that we are talking about are not in clinical areas. It’s really a fundamental restructuring that’s taking place in health care,” Sluka said. “The process we are going through is trying to be proactive in making sure that we are not only continue to provide the services for our community and patients in Central Oregon, but actually enhance our services.”

Sluka said the health system will be moving forward with adding a new electronic medical records system and also adding a new three-story hospital tower, scaled down from original plans.

As we first reported earlier this month, the health system projects a $25 million to $35 million gap in operating income in 2018.

St.Charles officials said these cost-saving measure may protect 80 jobs.

The hospital has offered a voluntary separation option to 72 employees, they have until Nov. 21 to accept the buy-out package.

John Nangle, the Oregon Nurses Association rep for St. Charles, told NewsChannel 21 he was blindsided by the layoffs announcement.

Nangle said the agency should invite the ONA to the table when it comes to these types of decisions.

He also said the community should be concerned about the quality of patient care they’ll be receiving.

“When St. Charles is talking about laying off caregivers, caregivers are environmental services people, they’re maintenance folks, respiratory therapist nurses,” he said. “When you start talking about impacting those folks’ lives, that is going to put more pressure on the rest of the employees, and that will negatively impact the quality of care.”

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Here’s the full announcement by St. Charles, Central Oregon’s largest employer:

Facing flat to declining revenue, inflation on labor and medical supply expenses and reimbursement impacts due to decisions made by the state legislature, St. Charles Health System is working to close a $25-$35 million gap in operating income for 2018.

Closing that gap is necessary to allow St. Charles to strive for a 3.7 percent operating margin in 2018, ensuring the organization can provide safety net services to the community and reinvest in its facilities and people.

“Although we have made progress in many areas, we know that legislative changes and our shifting payer mix will continue to be problematic as we look at 2018,” said President and CEO Joe Sluka. “We have to adapt to a new reality while still fulfilling our mission to serve all patients — and meeting our obligation to lower their overall cost of care.”

As a result, the health system has made the difficult decision to lay off up t o 30 caregivers this week.

Additionally, the organization will be:

· Reducing non-contracted, salaried caregivers’ pay by 5 percent for a minimum of six months starting Jan. 28, 2018.

· Suspending Merit increases for caregivers in 2018. Up to a 3 percent cost of living increase will be given to caregivers making less than $30 an hour next spring. This does not affect Oregon Nursing Association (ONA) step and grade increases.

· Increasing non-ONA caregivers’ cost to participate in the company’s health care plan;

· Cutting its executive team’s pay by 10 percent for a period of at least nine months.

St. Charles also recently completed its voluntary separation option and 72 caregivers who applied were offered the opportunity. They have until Nov. 21 to accept their buy-out packages.

In addition, St. Charles leaders have reached out to the ONA requesting a meeting to discuss how the union will be willing to help during these challenging times.

“These are incredibly difficult decisions,” Sluka said. “But taking these steps will save an additional 80 positions and will allow us to stabilize our finances without significantly impacting the services we provide to our community. We asked our caregivers for their ideas on how we could cut costs, and many said they would be willing to take a reduction in pay to support the organization. We are grateful for their support.”

About St. Charles Health System

St. Charles Health System, Inc., headquartered in Bend, Ore., owns and operates St. Charles Bend, Madras, Prineville and Redmond. It also owns family care clinics in Bend, Madras, Prineville, Redmond and Sisters. St. Charles is a private, not-for-profit Oregon corporation and is the largest employer in Central Oregon with more than 4,200 caregivers. In addition, there are more than 350 active medical staff members and nearly 200 visiting medical staff members who partner with the health system to provide a wide range of care and service to our communities.