Chesterton Tribune



Franciscan Alliance blames Affordable Care Act for job cuts

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Franciscan Alliance (FA) is blaming the Affordable Care Act--among other things--for a 1.4-percent workforce reduction, announced just before deadline today.

The “systemwide staff reductions” will affect 275 employees--of 20,000 total--at FA’s 11 hospitals and health facilities in Indiana.

“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,” FA said.

“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,” FA president and CE) Kevin Leahy said.

“Like other health systems, Franciscan Alliance must cut its costs of care delivery over the next 3 years by 15-20 percent”-- or by $375 million to $500 million--“to remain viable,” FA said.

The announced cut of 275 positions follows the elimination last month of 125 jobs in FA’s South Suburban Chicago Region, the statement noted.

In addition, FA said, “another 650 full-time equivalent positions will be eliminated by cutting back on assigned hours, closing open positions, retirements and through attrition.”

Going forward, its remaining 19,000 employees will see cutbacks in benefits in 2014, FA said. “These cutbacks include the elimination of the 1.5-percent 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,” FA said.

“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,” Leahy said. “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.”

“The staff reductions are among several initiatives Franciscan Alliance has undertaken, such as streamlining patient flow processes and coordinating care across the system to deliver quality outcomes and improve patient satisfaction,” the statement said. “Ongoing non-labor cost efficiencies continue to be researched, identified, implemented and monitored throughout the system as well.”

“We are profoundly aware of the impact our decisions have on the lives of our co-workers and their families,” Leahy said. “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,” Leahy added.

FA operates a 24-hour ER department on Indian Boundary Road in Chesterton and Franciscan St. Anthony Health in Michigan City, among its facilities.

No one was available this morning to discuss the workforce reductions with the Chesterton Tribune.


Posted 10/23/2013