YRMC trims jobs, pension plan
In an effort to ease financial pressure, Yuma Regional Medical Center is laying off employees and freezing pension funds.
“It's been a tough, tough year at the hospital,” said Pat Walz, chief executive officer of YRMC.
He blamed part of the problem on major cuts to the Arizona Health Care Cost Containment System about a year ago and federal health-care reform.
“The governor rolled back eligibility on AHCCCS. We budgeted for a certain amount of loss, but we have still taken a hit,” Walz said.
People without insurance or who don't qualify for AHCCCS under the new guidelines often go to the emergency room for medical treatment, and the hospital is obligated to treat them.
The result has been an increase in the amount of charity care, more than double from last year. In 2011, charity care totaled $20 million. So far this year, Walz said, the charity care amount is at $40 million.
In addition, YRMC has had to deal with “additional but necessary costs that were not anticipated” in connection with the hospital's transition to electronic health records in May.
“It just cost us more than we thought,” Walz said.
He noted the new e-records changed how work is processed, impacting multiple positions.
To offset the loss in revenue, the board directed Walz to look into reducing operating costs. With almost 50 percent of operating costs in salaries and benefits, hospital officials took “proactive measures” to evaluate employee effectiveness, “with our focus remaining on meeting the needs of patients and families.”
YRMC does not foresee a decline in patient services or volumes. “We continue to focus on providing quality patient care to every individual,” Walz pointed out.
After a review, YRMC determined that 135 positions would be eliminated. Of those positions, 65 are “as-needed,” or interim, positions and 70 are core positions.
Some of the positions included nine management service representatives and 16 paramedics in the Emergency Department. The paramedic positions will be eliminated effective Sept. 30.
Walz explained that Arizona Department of Health Services requirements limit the scope of practice for paramedics in a hospital setting. Therefore, within the hospital walls, they cannot perform the same duties as a registered nurse.
“Paramedics working in the hospital, their scope of practice is not the same as a nurse. Whether we did the layoffs or not, we'd still have to hire nurses (to replace paramedics).”
However, the largest number of layoffs involve patient safety companions. These employees were hired to sit with a patient who is likely to fall. Of the 60 that will be laid off, 47 are “as-needed” positions.
“Best practices have indicated that having someone sit in the room doesn't necessarily reduce falls and there are other ways to approach it,” Walz said.
In some instances, technology has replaced these positions. New hospital beds indicate when someone is in imminent danger of falling. If the weight changes or someone gets up from the bed, nurses are immediately alerted.
Despite the layoffs, Walz noted YRMC has not reduced the number of direct caregivers and continues to hire nurses to meet patient demand.
“It is always a difficult decision to cut jobs.”
To help affected employees, YRMC is working with the Yuma Private Industry Council to offer training in resume-writing and job interviewing skills. The hospital is also offering a year of post-termination education reimbursement if laid-off employees want to be retrained.
Additionally, YRMC also hosted an internal job fair for displaced employees, with 16 hiring supervisors and more than 35 employees attending.
Walz could not say how much the hospital would be saving with the layoffs. He noted that it's hard to pinpoint what would have been the earnings of the “as-needed” positions.
Throughout these changes, Walz said YRMC remains committed to its mission: “to serve through excellence, innovation and prudent use of resources.”
“All of this is extremely difficult, if you could imagine, but the board is committed to the long-term viability of the hospital.”
As another cost-saving measure, YRMC has frozen the employee pension plan.
Walz said the YRMC board of directors made the “difficult decision to freeze the pension plan and protect employee benefits earned to date.”
While the Prime Benefit Pension Plan funds have not been eliminated, employees will no longer have that option starting Sept. 30. Employees will automatically be changed over to a 401(k) plan on Oct. 1.
“As many businesses and organizations across the country are experiencing, we can no longer afford to maintain an employee pension plan, and are therefore freezing it,” Walz said.
The change began in 2006, when the board decided all new employees would go into the 401(k) retirement plan. At that time, current employees were given the option to remain in the defined benefit pension plan or enroll in the new 401(k) plan.
However, Walz noted the pension plan is “very difficult” to support. “There are so many variables. You don't know how long (pensioners) will live, and the federal government wants you to fund a certain amount.”
The cost for the hospital went from $8 million to $19 million this year.
“We're talking big numbers,” he said.
In addition, Walz pointed out, low earnings on investments and other variables make it difficult to budget and maintain the pension plan.
“In the long run (freezing the pension plan) allows us to budget better.”
However, there are exceptions for participants who meet certain “grandfathering” requirements. About 200 employees were grandfathered.
All employees active in the pension plan will be vested and benefits already earned will be there for them at retirement. Employees will keep what they've earned in pension as of Sept. 30.
Moving forward, the primary savings vehicle for employees will be 401(k) plan. YRMC will match contributions up to 4 percent, if employees contribute 5 percent.
Changes to the pension plan do not affect retired employees currently receiving benefits.
Walz said YRMC is “committed to maintaining a competitive benefits program and cultivating a partnership culture of shared responsibility.”
Mara Knaub can be reached at email@example.com or 539-6856. Find her on Facebook at Facebook.com/YSMaraKnaub or on Twitter at @YSMaraKnaub.