NO LOVE AT PREMIER HEALTHCARE

Premier, Inc., the Ballantyne, North Carolina-based healthcare solutions company, is reported to be engaging in a cost-cutting exercise that will result in reducing their workforce by at least 75 workers. The company provides “purchasing and performance improvement services to a network of 3,900 hospitals and 150,000 provider organizations.” The company’s 8-K filing with the Securities and Exchange Commission was laden with corporate speak. “As part of the Company’s ongoing integration synergies and efforts to realign resources for future growth areas, management is implementing certain personnel adjustments, including a workforce reduction. The majority of employees impacted by these personnel adjustments are from the company’s Performance Services segment.” 

Premier’s moderately-priced publication, Economic Outlook, “highlights emerging economic and industry trends to put healthcare executives ahead of the curve. Each edition of the Outlook reveals key financial, clinical and supply chain insights from a diverse range of industry experts” and “full of actionable knowledge on best practices and strategies to improve your organization’s performance – all drawn from the industry’s most progressive leaders.”

And yet I find it somewhat ironic that Premier is laying off employees to achieve pre-tax cost savings rather than growing their business in a time when medical institutions and care providers are merging, Medicare and Medicaid reimbursement rates are plummeting and Premier's services and strategic advice is sorely needed.   

Are you asking yourself, Am I Next?

NO LOVE AT THE UNIVERSITY OF ARKANSAS FOR MEDICAL SCIENCES

It appears that the end is not in sight for layoffs at the University of Arkansas for Medical Science, said to target approximately 45 tenured and tenure-track faculty members in addition to the elimination of 600 positions, a combination of unfilled positions and a layoff affecting 258 employees. 

Dear UAMS Family,

As I said in our December Town Hall meeting, we must cut in excess of $30 million in expenses this current fiscal year to comply with our budget as approved by the University of Arkansas Board of Trustees. UAMS has had financial challenges for many years and we have always made up for any shortfall by using our reserve funds. However, we are depleting our resources and we cannot continue to do that and sustain UAMS into the future. 

Over the last several weeks, UAMS leadership has been conducting a comprehensive review of all areas of UAMS to identify cost savings and make adjustments. However, personnel is our largest expense and we have come to the extremely painful realization that we can’t meet our budget without also eliminating jobs. We have no choice but to reduce our workforce by almost 600 positions. We have made every effort to cut unfilled positions where possible, but 258 of the affected positions are currently occupied. The employees whose jobs are being eliminated are being notified today. Human Resources representatives will also be reaching out to them to provide services to assist them in finding other jobs.

I have been at UAMS for more than 26 years. This is an extremely sad day and the first major reduction in force that I can remember. This is not an action that anyone is taking lightly and it is not being undertaken because of performance issues but simply because we do not have the money to fund everything we have in the past. We must all support each other and especially those colleagues who are leaving us. We are very grateful to them for their many years of service to UAMS and our state.

Sincerely,
Stephanie Gardner, Pharm. D., Ed.D.
Interim Chancellor

The proximate cause of the layoffs given by management is a $30 million shortfall in the UAMS $1.5 billion budget. Ironically, nothing is being said about senior management whose lavish salaries, perks, and privileges seem excessive; especially the Dean of Medicine who is reputedly paid $600,000 while being allowed to work abroad for months in Sweden. 

No reason was given for the shortfall. 

Are you asking yourself, Am I Next?

NO LOVE AT SCRIPPS HEALTH

Once again we find a major health care provider, this time famed $2.9 BILLION Scripps Health, engaging in layoffs as part of a reorganization that will address revenue shortfalls and the an uncertain competitive environment. Although Scripps CEO Chris Van Gorder did not cite the number of layoffs that will occur in 2018, he did say that layoffs would happen at an administrative and leadership levels. The health care enterprise employees 15,000 people, 3,000 physicians, and an unknown number of contract personnel.

CEO Van Gorder cites insurance companies reduced contracting rates and the increasing price competition for patients with high deductibles. Also cited was a $20 million budget shortfall, said to be the first indication of trouble ahead and the first such shortfall in the past 15 years.  Troubling, but not catastrophic for a private not-for-profit health care organization that sees a substantial financial revenue stream from its investment portfolio.

“Healthcare is changing rapidly with huge growth in ambulatory care and reduced utilization of inpatient hospitals --- and given the elimination of the individual mandate under the ACA, the uninsured will once again be growing nationally. It’s important that healthcare organizations proactively change to address these changes and Scripps is doing so with a major restructuring of our organization to (1) reduce costs for our patients; (2) increase the quality of our services even though they are already strong, and; (3) improve our patient experience in both our hospitals and our many ambulatory sites of care. Our organization remains strong financially as we prepare to spend more than $2.6 Billion to improve our facilities and comply with the State Seismic Safety Act – SB 1953 – but changes will be required to maintain that strength and, at the same time, find a way to lower our costs for our patients now and in the future. The changes we are making now will involve our leadership and administrative services. We are still hiring patient care givers.” <Source>

Scripps Health unveiled their new multi-billion dollar master plan in November, 2017 which represents the largest building program in the health care system’s 125-year history and triggers significant construction projects at its hospital campuses across San Diego County (California). According to Van Gorder, the master plan projects will be financed by operating revenues, borrowing and philanthropy. “We are thankful for that. We don’t receive government funding for these projects. It’s the generosity of grateful patients and others that has made us what we are today, and it will be that generosity that will shape us into who we become in the future.” Most of the construction will take place to address seismic replacements and retrofitting to meet state earthquake standards. In January, 2017, Scripps notified the State of California of its intent to borrow $168.5 million under the auspices of the California Health Facility Financing Authority with loan maturities up to 40 years. This program provides a borrower with access to low interest rate capital markets through the issuance of tax-exempt and taxable revenue bonds.