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Twenty employee positions have been permanently eliminated at Carroll County Memorial Hospital and those remaining on the job will be making less per hour and working less hours.
A minimum of 12 employees have been laid off, some of the positions were eliminated due to attrition, Chief Executive Officer Kanute Rarey said in a interview. “We looked at every department across the board to make these cuts and they came from almost all departments.”
In two press releases and an interview on Friday, Rarey explained the need for new cost-cutting measures to make up for lower numbers of insured patients and higher numbers of charity and uninsured patients.
As of Aug. 1, Rarey announced last week, CCMH will be taking the following steps, some temporary and some permanent, to reduce costs in an effort to maintain profitability:
• Hospital administration has taken a temporary salary reduction of 10 percent.
• Wages and salaries of all other employees have been temporarily reduced 10 percent hospital-wide.
• Twenty employee positions have been permanently eliminated.
• A hiring freeze has been implemented.
• Purchases are limited to items necessary to provide patient care and other essential job functions.
Some employees will take a double or triple hit in this situation because they will be taking a wage reduction and also working less hours, CEO Rarey said in an interview Friday, July 24. “Almost all are working 36 hours and we are sending some home during slow periods.” Earning less also means contributing less to 401(k) retirement plans.
“We hope this is the bottom but we can’t guarantee it.” Rarey said.
Hospital board member and Judge Executive Harold “Shorty” Tomlinson said in a telephone interview that the board of directors was involved in the cost-cutting measures. “This is a tough situation. Our volume is way down and the best thing we can do is get some business back in there.”
Rarey explained the hospital’s commitment to the community and the longer-term plan for the hospital. “The changes we have asked of our employees are to preserve jobs while transforming the hospital into a smaller, more flexible organization serving the lower number of patients we are seeing at this time.”
Tomlinson echoed Rarey’s sentiment saying, “the employees have really been dedicated to that hospital.”
Rarey said officials at the hospital expect it’s utilization to rebound and to grow in the future, but looking at national, regional and local economic indicators, it could be several years before that improvement happens. Rarey also believes making the permanent changes will ensure the temporary changes are indeed temporary.
At the heart of this problem is a reduced number of patients using the hospital, and the increas ing number of charity and uninsured patients treated by the hospital, Rarey explained.
The hospital employs more than 150 individuals and has an annual payroll of more than $5 million, Rarey said. But the hospital provided $4 million in services to people who could not or did not pay for their treatment in the last year.
Rarey stated in the release “the activities of CCMH and area physician offices have decreased over 15 percent since the beginning of the year. They had been gradually declining throughout 2008.”
Tomlinson said that “people want guarantees … People that have worked in healthcare for 30 or 40 years can’t guarantee anything out there.”
CCMH is a rural independent hospital and they are not part of a large hospital group, nor do they have large endowments available to help when cash runs short or to purchase or upgrade equipment, Rarey said.
What must happen is to decrease costs and increase revenues, just like any other small or large business to remain profitable and stay open. Rarey said he, the staff and the board would continue to look for ways to increase revenues by adding services needed in the community.
While not ready to make an announcement as to what those services might be, he did indicate that depression for the elderly and a female primary care physician were needs already seen in the community that the hospital could address.
Rarey also cited that hospitals in the area such as King’s Daughter’s Hospital in Madison laid off 110 employees last winter and the Oak Tree long term care hospital in La Grange announced last week it will close its doors.
There are 5,000 hospitals nationwide, Rarey said and 1,200 are small rural critical access hospitals similar to CCMH, with two-thirds of those being west of the Mississippi River.
“The hospital will continue to be a critical part of the quality of life in Carroll County as families and businesses look to re-locate here,” Rarey said.