“It will affect Erlanger at Hutcheson in the same way it has and will all hospital systems across the country,” Hutcheson CEO and president Roger Forgey said via email on Feb. 20.
“This move (labor reorganization) also affects all Erlanger-owned campuses — Baroness, Children’s Hospital, Erlanger North, Erlanger East and Erlanger Bledsoe,” Erlanger spokesman Pat Charles said.
Erlanger recently eliminated six executive positions and now intends to reduce its mid-level managers by 25-30 positions according to the health system’s labor management plan. News reports estimate the health system is $12.5 million in the red so far this budget year.
Officials point to Hutcheson’s rise in uncompensated care as a primary reason for decreased revenues.
“We must find some way to reduce our expenses as reimbursements decrease,” Forgey said. “We will be looking at all our expenses, while we also have to grow our volumes. It is not possible or practical to cut your way to success but as much as is possible, costs must be cut.”
Erlanger recently released an internal memo to its employees outlining the second phase of its labor management plan. The Catoosa County News received a copy of the memo via email Monday afternoon, Feb. 20. It states Erlanger began cutting middle management on Jan. 27.
“These reductions were made throughout the organization, in both clinical and non-clinical areas, and not concentrated in any specific area,” the memo reads. “Great care was taken during the management realignment to ensure that patient care would not be impacted. The goal was to create a more effective management team, with key decision makers closer to the point of service.”
The memo also states a voluntary buyout program at the staff level will be implemented “in selected departments” and should be completed by March 31.
“It is imperative that we get our financial house in order before the last quarter of this fiscal year, which begins on April 1,” the memo reads.
The health system intends to save a reported $1.6 million annually through layoffs, voluntary buy-outs and furloughs.
Erlanger president and CEO Charlesetta Woodard-Thompson previously stated, “Labor represents in excess of 50 percent of our costs at Erlanger.”
The Fort Oglethorpe hospital entered a management agreement with Erlanger on May 26, 2011. As part of the agreement, Erlanger extended a $20 million credit line to Hutcheson. News reports indicate Hutcheson has so far received $7.2 million of the loan.
Despite financial challenges, Hutcheson officials have said they expect the Fort Oglethorpe hospital to start recovering its financial footing in late September.