Business and Economics

Franciscan Reduces Benefits to 19,000, Dismisses 275

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October 23, 2013 — An Indiana hospital system says it is dismissing 275 employees as it, “is responding to the transformative shift in hospital economics with systemwide staff reductions.”  It says, “The remaining 19,000 employees will see cutbacks in benefits in 2014.” 

From Mishawaka today,  Franciscan Alliance announced its staffing reduction will affect its 11 hospitals and health facilities in Indiana, as 1.4% percent of its workforce will be laid off from approximately 20,000 employees.

The health system says, “The healthcare industry is changing rapidly and economic pressures are forcing substantive changes in the field, including reduced reimbursements, new payer models, healthcare reform laws and shifts from inpatient to outpatient care.”

Franciscan Alliance president and chief executive officer Kevin Leahy says, “Franciscan Alliance has not been immune to such pressures and has found it necessary to align staffing levels to reflect lower patient volumes and reduced industry wide reimbursements brought on by reforms associated with the Affordable Care Act.”

Franciscan Alliance says in its announcement today that it must cut its costs of care delivery during the next 3 years by 15-20%, or $375,000,000-$500,000,000, to remain viable.

It says the 275 workers to be laid-off from their positions join 125 Franciscan Alliance South Suburban Chicago Region positions eliminated last month, and another 650 full-time equivalent positions will be eliminated by cutting assigned hours, closing open positions, retirements and attrition.

The Alliance says, “The remaining 19,000 employees will see cutbacks in benefits in 2014. These cutbacks include the elimination of the 1.5 % employer match to the 403b retirement savings program, elimination of the PTO buy-back program, higher employee contributions for healthcare insurance, no salary increases for management, and a new defined benefit/defined contribution pension for all co-workers not vested by 1/1/2014 in the defined benefit pension plan. The cost savings from these, and other recent pay practice changes, will help preserve hundreds of other jobs, which otherwise would have to be eliminated.”

Leahy says, “Recent trends and the new law are challenging healthcare providers to manage the continuum of care for patients more efficiently and effectively to ensure the same quality outcomes at reduced reimbursement levels.  Our challenge is to staff our campuses in line with the reduced inpatient volumes that are a byproduct of recent healthcare trends and the new law.”

Regarding the impact on employees affected by the reduction in workforce, Leahy emphasized, “We are profoundly aware of the impact our decisions have on the lives of our co-workers and their families.  Consistent with our Franciscan Values, we will make every effort to support all Franciscan team members through these difficult changes.  Those whose jobs will be affected by the workforce reduction will be provided with severance, extended health insurance where eligible, and outplacement assistance.  Whatever measures we take will not compromise our goal to provide patients the high-quality, compassionate care they expect and deserve.”

Franciscan Alliance is a Catholic healthcare system with 13 hospital campuses, approximately 20,000 employees and a number of nationally recognized Centers of Health Care Excellence. Its hospitals include:

Franciscan St. Anthony Health- Crown Point,

Franciscan St. Anthony Health-Michigan City,

Franciscan St. Elizabeth Health-Crawfordsville,

Franciscan St. Elizabeth Health- Lafayette East,

Franciscan St. Elizabeth Health-Lafayette Central,

Franciscan St. Francis Health-Carmel,

Franciscan St. Francis Health- Indianapolis,

Franciscan St. Francis Health-Mooresville,

Franciscan St. James Health-Chicago Heights, Ill.,

Franciscan St. James Health-Olympia Fields, Ill.,

Franciscan St. Margaret Health-Hammond,

Franciscan St. Margaret Health-Dyer,

Franciscan Healthcare-Munster. 

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