Grinnell Regional Medical Center has announced today that it has restructured the organization to prepare for the future.
As part of the restructuring, GRMC eliminated 23 filled positions and 18 unfilled positions, for a total of 41 positions. In addition, another 11 individuals have been offered alternative roles within the medical center. GRMC notified employees of the restructuring on July 1.
The restructuring was needed because of declines in revenues caused by government cuts to Medicare and Medicaid and lower admissions. Healthcare providers across the country are facing revenue shortfalls as a result of fiscal cliff negotiations and sequestration. Earlier this year, GRMC received an unexpected revenue reduction when Congress eliminated almost $1 million from projected paymentsin Medicare cuts and a rural outpatient payment programduring fiscal cliff negotiations and sequestration.
These cuts were especially troubling for GRMC, which receives about 60 percent of its annual revenue from Medicare and Medicaid. In 2012, GRMC received over $2 million less than what it cost to provide services to Medicare patients.
In addition, charity costs continue to climb. GRMC will write off about $2 million in financial assistance and bad debt in 2013.
For many years, everyone at GRMC has worked hard to make GRMC cost effective without sacrificing quality patient care. In fact, we were just recognized in a national publication as one of the safest hospitals in America. These latest cuts from federal and state funding along with changes in hospital usage really forced us to look at how we are structured. The board feels strongly that GRMC needs to make these changes in order to protect the communitys access to healthcare for the future. It would be wrong on our part to not do what we can to make GRMC thrive, says Bill Menner, volunteer chair of the GRMC board of directors.
As part of the restructuring, seven GRMC physicians will serve on a $500K committee. This group will analyze ways to increase revenue and/or improve efficiencies by $500,000. Senior leaders are also having conversations with other area hospitals to discuss ways in which the organizations could work together to a mutual benefit. The medical center also cut the salaries of the senior administrative team.
Health reform is playing into everybodys decision-making process right now. We are experiencing what every other hospital nationwide is experiencing, says Todd C. Linden, GRMC president and CEO. We are very proud of the quality of care we provide by our talented and dedicated team. We have had to become extremely efficient over the years because of the governmental shortfalls in payment.
According to the U.S. Bureau of Labor Statistics, roughly 5,900 hospital jobs were cut across the nation in May.
We needed to respond and adapt to the magnitude of these shortfalls this year and in the next several years, finding expense reductions equal to our anticipated revenue reductions, Linden adds. These include payment reform, the Affordable Care Act, and national trends toward declining inpatient volumes. As healthcare transforms itself, more patients are being cared for in an outpatient setting rather than in an inpatient room. This restructuring will not affect patient care, but will allow the medical center to bring its operating expenses in line with patient revenues.
Combined these changes are expected to save the medical center about $2.5 million annually.
Employees affected by the restructuring will receive severance packages. The packages include 30 days of pay; the continuation of GRMC insurance benefits through August; COBRA benefits; continued participation this summer in the GRMC day camp program for dependants; access to the employee assistance program, including rsum writing, counseling, financial consultation, and more for 60 days; and unemployment benefits.
GRMC is a private, nonprofit, non-tax-supported hospital. In 2009, the medical center affiliated with Mercy Health Network in Des Moines. Although affiliated with MHN, GRMC is an independent hospital governed by a board of directors comprised of volunteers from the community. Through the affiliation with MHN, GRMC has lowered costs through shared contracting; improved revenues through strength in payer negotiations; benefited from shared continuing education costs and attorney fees; and improved quality and service through shared best practices and innovations.
Before the restructuring, GRMC had 353 full-time employees, 28 part-time employees, and 48 occasional employees. Since 2008, when the medical center employed 522 people, GRMC has worked to reduce its workforce through attrition for cost containment purposes.