St. Charles details mix of cuts, worker options after losing $39 million in revenue

(Update: Adding video, comments from St. Charles' chief financial officer and Oregon Nurses Association)

BEND, Ore. (KTVZ) – On Thursday, the St. Charles Health System announced its new plan to "regain its financial footing" following the impacts of COVID-19. Between March and early May, the health system lost $39 million in patient revenue as the result of canceled elective surgeries and a steep decline in patient visits.

At the same time, its spending increased by about $6.5 million in order to plan and prepare for COVID-19, including purchasing extra hospital beds, additional personal protective gear, screening tents and supplies, ventilators and new technology for virtual visits.

St. Charles also paid for 52,000 hours in missed shifts, at a cost of more than $2.1 million and—with the help of the community—created a Hero Fund to award bonuses to front-line caregivers, the hospital system noted in its announcement

The system paid caregivers for shifts they were called off, but come mid-June, it will stop paying caregivers for those missed shifts.

Jenn Welander, St. Charles' chief financial officer, told NewsChannel 21 they are focused on receiving grants and funds through the CARES Act to help them recuperate.

St. Charles Health System is the largest employer in Central Oregon by far, with more than 4,500 employees.

Welander said although they will continue to screen applications for open positions, they are only hiring for positions they deem absolutely necessary, for the time being.

"Our focus is the caregivers we have here today, and challenging ourselves in innovative ways to get the work done with the resources and the team we have," Welander said.

Kevin Mealy, a spokesman for the Oregon Nurses Association, said the health system's proposal is concerning.

"It’s shortsighted to cut caregivers during a pandemic while we’re trying to rebuild capacity and prepare for long-term health effects," Mealy said. "It’s concerning for them to propose pay cuts to the people we’re all relying on."

He said he and other ONA representatives are more than willing to help St. Charles come up with alternative plans.

"It’s disappointing to see them unilaterally come up with solutions, so at this point we’re looking at an incomplete picture and taking a pretty drastic solution, which is cutting caregiver hours and pay," Mealy said.

“We need to take action to improve our financial stability, but we are absolutely committed to doing that in ways that have the least impact on our caregivers,” said St. Charles President and CEO Joe Sluka. “COVID-19 has changed our lives in ways we couldn’t have imagined just a few months ago, but by working together, we will get through this and come out stronger on the other side.”

To spearhead St. Charles’ recovery, the health system’s Executive Care Team is taking a 10 percent pay cut through the end of the year.

Additionally, the health system said it will:

• Give caregivers who qualify the opportunity to participate in one or more of three voluntary programs, including a temporary reduction in hours, unpaid time off or a summer sabbatical.
• Require caregivers in non-patient-facing areas to use earned time off or unpaid time off during extended closures around the Fourth of July, Thanksgiving and Christmas holidays.
• By mid-June, return to its normal way of flexing staffing, based on patient volumes, which means caregivers who are “called off” will no longer be paid for missed shifts.

Like other health systems around the state, St. Charles said it "is experiencing the financial reverberations of the pandemic."

St. Charles Health System Public Information Officer Lisa Goodman said there have been no layoffs at the hospitals or clinic.

Sluka said, “It is important for us to support our caregivers in every way possible during this incredibly stressful time. Protecting their overall well-being continues to be one of our main goals throughout our recovery.”

Since early May, St. Charles said it has been able to slowly and safely expand its surgical and procedural volumes, with guidance from Gov. Kate Brown and within the guidelines provided by the Oregon Health Authority.

“This is great news for our patients who have been waiting for these needed services,” Welander said. “But while our volumes are starting to come back, we are not yet allowed to operate at our full capacity, and getting back on solid financial footing will take some time.”

The health system has set a goal to “break even” for two months by the end of 2020. But even if St. Charles is able to hit that benchmark, current projections show the organization may still lose more than $50 million this year, as the financial impacts from the COVID-19 pandemic remain uncertain.

“We simply are not generating enough money we need to care for patients, invest in our caregivers and support our community,” she said. “Instead, we are spending down our reserves, and that isn’t sustainable. This recovery is complicated — it was complicated to prepare for a surge, it’s going to be complicated to manage COVID-19, and it’s going to be very complicated for us to navigate this financial situation.”

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, La Pine, 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.