Franciscan Alliance cutting 925 jobs

Franciscan Alliance, which last month cut more than 100 jobs at its two south suburban hospitals, is laying off 275 employees and cutting 650 other full-time positions across Indiana, the health system said yesterday.
In September, Mishawaka, Ind.-based Franciscan said it would cut about 125 positions at two of its 13 hospitals, Franciscan St. James-Olympia Fields and Franciscan St. James-Chicago Heights. Those reductions came four months after Franciscan said it was seeking a buyer to take over the two struggling hospitals.

The latest in the series of restructurings will reduce Franciscan's workforce by 1.4 percent, according to the Associated Press. The workforce reductions will come through a combination of retirements, other attrition and reduced hours, AP reported.

The Catholic health care system cited economic pressures, including reduced reimbursements, new payer models, the federal health care overhaul and shifts from inpatient to outpatient care.
“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 industrywide reimbursements brought on by reforms associated with the Affordable Care Act,” Kevin Leahy, Franciscan's president and CEO, said in a news release.

“Recent trends and the new law are challenging health care providers to manage the continuum of care for patients more efficiently and effectively to ensure the same quality outcomes at reduced reimbursement levels,” Mr. Leahy said. “Our challenge is to staff our campuses in line with the reduced inpatient volumes that are a byproduct of recent health care trends and the new law.”

$500 MILLION IN COST CUTS
Franciscan said it must cut its costs by 15 to 20 percent, or as much as $500 million, over the next three years to remain viable.

Franciscan's remaining 19,000 employees will see cuts in benefits next year, including no salary increases for management, the elimination of a 1.5 percent employer match of their 403(b) retirement savings program, and higher employee contributions for health insurance, the system said. Employees not vested in the pension plan by Jan. 1 will get a new defined-benefit pension program.

The Indianapolis Business Journal reported Franciscan's 13 hospitals in Indiana and Illinois pulled in revenue of $2.5 billion in 2012, generating a net gain of $110 million, excluding a special accounting charge. However, its operating profit margin decreased to 4.5 percent from 5.2 percent the previous year. Franciscan ranks second in revenue among Indiana-based hospital systems, behind IU Health.
Indianapolis-based IU Health cut 935 positions, or 2.6 percent of its workforce, on Oct. 1. Indianapolis-based St. Vincent Health announced in June it was laying off about 865 workers, or 5 percent of its workforce.
Franciscan operates hospitals in Crown Point, Michigan City, Crawfordsville, Lafayette, Carmel, Indianapolis, Mooresville, Hammond, Dyer and Munster.