UPDATE: Hospital plans to reduce $5 million this year
BENNINGTON - Faced with a decline in revenues, the hospital intends to reduce its expenses this fiscal year by between $4 million and $5 million, which officials say will impact an unknown number of jobs.
Southwestern Vermont Health Care Spokesman Kevin Robinson said over the past six months, SVHC, which runs Southwestern Vermont Medical Center, has seen a drop in hospital revenues that looks as though it will continue in the long term. He said after the hospital makes its reductions for this year, it will form a plan to reduce expenses by 15 to 20 percent over the next five or six years.
"This work will lead to changes in the jobs people do within health care. And yes, it will lead to fewer hospital jobs, even as we add jobs in other health care settings," SVHC CEO Thomas Dee said in a letter sent to SVHC employees Tuesday and to the Banner as a guest column.
"I recently challenged our management team to reduce our expenses by $4 to $5 million in the coming year," wrote Dee. "That's a first step. To survive with payments at Medicare levels, we will need to reduce our expenses by 15 to 20 percent over the next five-to-six years."
Robinson said there are no plans to shed a large number of employees. However, the hospital has yet to determine how many employees it expects to lose, where those employees are in the health system, or when the job cuts would take place. "We think within 90 days we should have a clearer plan for reducing our fiscal expenditures for this year," said Robinson.
Over the past few months, the hospital had reduced its workforce by 3.5 full-time positions. One was an upper-management position and one was a middle-management position, according to Robinson. Those reductions were part of the normal course of business as the hospital is always looking for ways it can reduce expenses, he said.
Robinson said other hospitals in the region have been reporting revenue losses. The losses are large the result of fewer billable services like surgeries and tests. He said September revenues were particularly low this year, while October showed an increase. However, both months were below last year's mark.
Robinson said the losses in the last six months are not equal to the $4 million to $5 million in planned reductions, but those numbers are needed to keep the hospital financially stable.
"In the coming years, we expect payments from private insurance to drop to Medicare levels, which are below our costs. That makes reducing expenses an imperative," wrote Dee. He went on to write about reducing health care costs through improving communication between providers and changing payment models to reflect keeping populations healthy rather than the existing fee-for-service model, which some say promotes more hospital visits and procedures, and inflates costs.
According to Robinson, one of the things the hospital will be looking at is how its current employment levels reflect the type of business it plans to be doing in the coming years. He said there may be less jobs in the hospital, but as more patients are nudged towards outpatient and home care, jobs in those areas may increase.
"No matter how unsettling or difficult these changes may be, we must begin them now," wrote Dee. "We cannot wait for falling payments or government regulation to force change upon us."
Robinson said the hospital feels it is important that it be honest and up-front with employees on what direction the health care group is going. He said after the 90 days when a clearer picture of this year will be formulated, the hospital will set to work on its more long-term goals.
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