Penn Highlands Healthcare Announces Workforce Changes at Penn Highlands Elk in St. Marys

As an essential first step in a planned, system-wide restructuring intended to help stem financial losses and right-size facilities in the wake of reduced inpatient volumes and decreased revenue, Penn Highlands Healthcare announced Wednesday that it has adjusted its workforce at Penn Highlands Elk.

The workforce adjustment will involve full- and part-time clinical, support and management positions at Penn Highlands Elk and is designed to bring staffing levels into alignment with reduced inpatient volumes. It will result in elimination of jobs for 28 employees and a reduction in hours for 25 others. In addition, 15 positions that are or soon will become vacant due to previous resignations or scheduled retirements will not be filled.

The action is an outcome of the health system’s 2015-2016 strategic planning process and is designed to help position Penn Highlands Elk for the future in a rapidly changing healthcare environment that is negatively affecting hospital and health system bottom lines nationwide.

“When we formed Penn Highlands Healthcare, our mission was to secure, enhance and expand quality healthcare services in the eight-county region we serve,” said Raymond A. Graeca, chief executive officer, Penn Highlands Healthcare. “Although we have accomplished much in the areas of enhancing and expanding the primary care and specialty medical services we offer the residents of this region, we have known for some time that we still have some difficult but necessary work to do in securing the future of our facilities. Today’s announcement involving Penn Highlands Elk is an essential first step toward that goal.”

Graeca said steep decreases in inpatient volumes, shorter lengths of stay, reduced reimbursement from government and private insurers, dramatic increases in bad debt and uncompensated care, and a sustained shift toward outpatient procedures have significantly reduced hospital revenues. These decreases have not only been seen at Penn Highlands’ facilities, but statewide and across the country. Many of these changes are attributable to Obamacare and have resulted in mergers, acquisitions and the need for hospitals and health systems to fundamentally change the way they do business.

“We’re facing a very different healthcare delivery environment today than we were five years ago, and the American Hospital Association is projecting that the next five years alone will hold more change than we’ve seen in the past 75 years combined,” said Graeca. “Penn Highlands Healthcare is taking the steps necessary to ensure that we are positioned to keep pace with that change.”

Rose Campbell, RN, BSN, MBA, president of Penn Highlands Elk, echoed Graeca’s comments. She noted that admissions at Penn Highlands Elk during fiscal year 2014 are down 13 percent over the prior year and are down 18 percent since 2009. Inpatient surgeries are down by 10 percent in fiscal year 2014 over the previous year, and inpatient days are down 14.5 percent during the same period.

As a result of these decreased inpatient volumes, reduced reimbursement from insurance companies and increases in uncompensated care and other factors, Penn Highlands Elk has experienced operating losses in four of the last five fiscal years totaling $3.2 million.

“Losses in operating revenue simply are not sustainable and cannot be permitted to continue,” Campbell said.

She added that approximately 51 percent of Penn Highlands Elk’s patient revenue comes from government insurers, primarily Medicare and Medicaid. She said payments made by these insurers do not cover the cost of care, requiring the hospital to absorb the resulting losses. She added that the 2013 federal budget sequestration resulted in an additional 2 percent reduction in Medicare reimbursement to hospitals and that this cut alone has resulted in a reduction in payments of $565,000 annually at Penn Highlands Elk.

According to Campbell, the workforce adjustment is expected to result in a savings of approximately $2 million annually.

Individuals affected by the workforce adjustment will be referred for unemployment compensation. Former employees will be encouraged to use the services of CareerLink, the employment resource center established by the Commonwealth of Pennsylvania to assist individuals with the employment transition process.

In the months leading up to the workforce adjustment, the health system implemented several measures to help control costs. These measures include a hiring freeze, which allows only mission-critical positions to be filled; a requirement that all overtime hours must receive prior approval; and a freeze on all discretionary spending.

In addition, Penn Highlands Elk realized savings in supplies and other operational costs because of its connection with the Penn Highlands system. However, those measures were not sufficient to offset the losses, Campbell said.

“While this is an outcome no one wants, reducing staff to match patient activity is necessary for the long-term health and strength of this hospital. All of our employees make important contributions to the hospital, and those affected by this decision are no exception. We deeply regret the hardships they and their families will bear. However, not taking such essential action would be irresponsible and would represent a real threat to the continuation of health care services in the Elk/Cameron region,” Campbell said.

Graeca said workforce adjustments and service realignments at all of the health system’s facilities are being evaluated.

He added that Penn Highlands officials have shared portions of the health system’s 2015-2016 strategic plan with employees and medical staff at all four Penn Highlands’ campuses.

Graeca noted that the strategic plan includes a number of initiatives designed to expand patients’ access to physician specialists and advanced practice providers such as nurse practitioners and physician assistants, as well as a range of outpatient service offerings that will be conveniently located throughout the health system, including the Elk campus.

“Although some of the methods of healthcare delivery in a post-Obamacare world will look different than they have in the past, the one thing that remains the same is our strong commitment to providing the best possible care to all of our patients, including those in the Elk/Cameron region. Our goal is to ensure that we are always providing the right level of care, at the right time, and in the right place to manage costs responsibly, while delivering top quality care to the communities we serve,” Graeca said.

In the coming months, Penn Highlands Healthcare plans to launch several initiatives at Penn Highlands Elk that will help redefine the hospital’s mission, improve customer service, enhance quality and increase access to care. These plans include:
• Demonstrate performance that exceeds benchmarks in quality and patient safety.
• Recruit additional physicians and advanced practice providers; thus reducing outmigration of patients from Penn Highlands Elk.
• Work to reconfigure service lines to ensure convenient access to primary, community-based health care.
• Improve the patient experience and timely throughput at the hospital’s emergency department.
• Optimize the utilization of the St. Marys Community Medical Building by increasing the services offered at that location.
• A recommitment by Penn Highlands Elk to the communities of Johnsonburg and Emporium by securing primary care physicians in those communities.
• Enhance the physical size and hours of operation of QCare St. Marys for the comfort, privacy and access of our patients.
• Open a new primary care clinic/QCare in Penn Highlands Elk’s service area.

“Although Penn Highlands Elk is changing, one thing remains the same, its strong commitment to providing the best possible care to all patients. Penn Highlands Elk has served its communities for more than 100 years, and plans to continue doing so for many more,” Campbell said.