2010-02-13 / Front Page

Cole reveals plan to ‘turnaround’ financial slide

Charles Cole Memorial Hospital is taking steps to combat a $1.3 million deficit just six months into its fiscal year. Layoffs, elimination of positions and wage reductions are all part a financial turnaround plan.

Like many hospitals across the nation, Cole has experienced larger than expected financial losses. Rising unemployment and a stagnant economy have resulted in patients going without insurance, or relying on government programs such as Medicare and Medicaid, reducing income to the hospital.

“For us, this pattern started over eight years ago,” said President and CEO Ed Pitchford. “We have adjusted our budgets and worked with our lawmakers to help provide appropriate funding to economically depressed areas.”

In 2007, Cole enrolled with Medicare as a “critical access hospital,” which raised reimbursements by approximately $2 million per year. Cole has also qualified for supplemental Medicaid payments from the state.

According to Pitchford, financial performance has fallen short of expectations for four primary reasons.

• Services provided to state Medical Assistance patients have increased by 40 per- cent in a year and now represent 20 percent of Cole’s total business;

• Employee health insurance costs have increased;

• Pa. Dept. of Pubic Welfare payments have been affected by state budget woes;

• Cole has been unable to fill some professional vacancies as quickly as hoped, resulting in the use of more expensive temporary staff.

The state recently announced more budget cuts that will mean $500,000 less for the hospital from January through June.

“Because of the cumulative effect of several years of deficits, our current financial results and the looming state budget cuts, we must make some difficult decisions to protect our financial viability,” Pitchford said.

To minimize layoffs, salaried and hourly employees will see a reduction in wages of 6.25 percent affecting all staff except those covered by employment agreements; the CEO hopes to conclude discussions with that group soon.

Staff reductions will occur due to position eliminations, attrition, retirements and job reassignments. Job cuts will involve all areas of the hospital, including leadership.

The hospital will reduce its use of temporary professionals such as physical and occupational therapists.

“In total, we expect 18 or 19 positions to be affected,” Pitchford said. Action has already been taken on some of these and a few will occur in the coming months.

“We are attempting to achieve the necessary expense reductions in a way which minimizes the impact on our workforce, our patients and the communities we serve,” Pitchford said.

The hospital will move forward with certain program expansions and growth, as well as vendor negotiations.

“Growth is essential to long-term viability, especially in health care, where payment rates from government and commercial payers do not keep up with inflation,” the CEO remarked. He noted that a community health needs assessment is being performed. Last year, the hospital updated its medical staff development plan.

Pitchford said the hospital will continue to improve both its emergency department and operating room areas. A new physician assistant studies program launched in partnership with Lock Haven University will not be affected. An inaugural class will begin studies in May.

“While none of these actions are pleasant for any of us, we must move forward with enthusiasm and dedication to preserve this organization,” Pitchford said.

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