One of the Tri-Cities’ largest employers announced plans to eliminate 161 occupied and vacant positions Wednesday, pointing to decreasing revenues attributed to recent health care reform efforts.
In an emailed statement, regional nonprofit health care provider Mountain States Health Alliance said 116 currently filled positions and 45 vacant positions were cut to offset funding losses created by the Affordable Care Act, the federal budget sequestration and Tennessee and Virginia’s refusal to accept dollars earmarked for expanding their state-run Medicaid programs.
Of the 116 employees affected by the reductions, 54 are from supervisory and management positions, and none of the staff that interacts directly with patients will be part of the cuts, MSHA spokeswoman Teresa Hicks said Wednesday.
The employees will remain on the company’s payroll for 90 days, and will have the option to use its Career Resource Center to retrain for other positions in the system or to search for an outside job.
The remaining 9,000 employees’ benefits will also see temporary reductions, mostly concerning paid time off policies.
According to Hicks, employees in supervisory roles, from supervisors up to newly hired President and CEO Alan Levine, will have the accumulation of their PTO paused for 90 days, starting Feb. 1.
The PTO cash out program, which allows employees to receive pay for built up vacation days, will be capped at 40 hours until the end of the organization’s fiscal year on June 30.
According to public tax documents submitted by the nonprofit for the 2011-12 fiscal year, MSHA’s 19 highest paid executives earned a combined $8.1 million in that year in reportable and estimated compensation from the organization.
Then-CEO Dennis Vonderfecht earned $1.2 million that year, an increase of $369,000 over the previous year.
Since January 2012, when the federal cuts to Medicare funding written into the ACA began to take effect, Mountain States has shed 700 full-time equivalency positions through attrition to mitigate the reported $30 million annual loss amplified by the sequestration put into effect in 2013.
Counter to the intentions of the sweeping health care law, half the states in the nation have refused to accept the offered federal dollars funding the expansion of each state’s Medicaid program, which MSHA expected to make up for $20 million of those cuts yearly.
Inpatient volumes at the system’s 14 hospitals and in its network of affiliated clinics has declined 9.5 percent since 2012, necessitating a new financial strategy from the organization to handle the widespread losses, officials said.
“Mountain States Health Alliance is a strong organization that is positioned well to manage through these challenges,” Levine said in an issued statement. “But we are not immune to the realities imposed on us. The problem would be dramatically worse for our local hospital if we didn’t act rationally on an ongoing basis to ensure our cost structure reflects the cuts we are expected to absorb.”
The combined salary and benefit cuts make up 25 percent of MSHA’s goal for reductions.
The company statement underscores the system’s need to continue to find savings in its operational costs.
Wellmont Health System, Mountain States’ competitor in Northeast Tennessee and Southwest Virginia, announced last week that it intends to seek another company with which to affiliate to help share some of the expected losses.
Earlier this year, Wellmont closed one of its community hospitals, pointing to difficulty finding doctors to agree to on-call coverage, and the funding and patient losses experienced by most health care providers in the country.
Hicks said Wednesday that it’s “too early to tell” if Mountain States may be an interested partner.