Hospital expects $75M in Medicare cuts
NAPA — Queen of the Valley Medical Center on Tuesday said it would cut about 111 jobs — around 10 percent of its workforce — at the 191-bed hospital while closing four outpatient units, citing the “rapid and historic transformation” of the health care industry.
In addition, the St. Joseph Health–owned hospital said five units of the facility will be outsourced and hours would be reduced for five positions.
“Cuts in federal and state funding, legislative policy and health care reform compel us to take action to further strengthen our hospital in order to ensure we are positioned to continue serving our communities well into the future with the high-quality and compassionate care that has always defined us,” Walt Mickens, president and CEO, said in a statement. “We are making changes now so we may respond proactively and affirmatively to these challenges.”
In California, hospitals anticipate $23 billion in payment cuts from the Medicare program between 2014 and 2023, mostly due to changes brought on by the Affordable Care Act. At Queen of the Valley, that amounts to $75 million in payment cuts, officials said.
Additionally, increased competition from Kaiser Permanente is squeezing Queen of the Valley, having successfully enrolled more Napa County residents and businesses in health plans offered through Covered California, according to spokeswoman Vanessa deGier. Kaiser has approximately 50,000 insured residents in Napa County, which accounts for nearly a third of all insured residents in the county of roughly 140,000 people, Ms. deGier said.
In an attempt to recapture some of that immediate market share, Queen of the Valley and St. Joseph Health have partnered with Western Health Advantage, a Sacramento-based HMO that is offering plans to businesses and through Covered California. But it’s too early to see any definitive gains from the partnership, Ms. deGier said, although in recent months enrollment in Western Health was starting to increase.
“We really feel the move from employers when they choose a health plan because it’s cheaper, and that’s why we started the partnership with Western Health Advantage,” she said. “Ninety-six percent of people were choosing Kaiser or Blue Cross, but in the last month, we have really seen an uptick.”
Queen of the Valley is far from alone among hospitals grappling with the reform-driven landscape, although it goes beyond just the Affordable Care Act, said Mark Knight, a health care consultant in Santa Rosa.
“It’s pretty much a national trend, where hospitals are feeling the pinch for a lot of reasons,” he said. “I wouldn’t really blame it on the Affordable Care Act, because that has a lot of good pieces to it. But part of the whole act includes reductions in Medicare.”
Other factors include some institutions still recovering from the recession and the increasing shift toward the outpatient setting, which has only accelerated under health care reform.
While hospitals are faced with continued uncertainty, trends that are reducing wait times and utilization rates are positive developments, and hospitals will adjust in due time, Mr. Knight said. In the immediate term, it will likely be a struggle.
“You’re keeping people out of the hospitals,” he said. “They’re not readmitting people as much — all those things are good. The unfortunate byproduct is it affects people employed by hospitals and in the inpatient setting.”
Echoing that sentiment, hospital officials said the unit closures and staff reductions will help position the hospital for long-term sustainability.
Units to be closed in the next 60 days include the WorkHealth Occupational Health Services, Wound Care Clinic, Cardiac Rehabilitation and Coumadin Anticoagulation Therapy Clinic and Forensics Clinic.
Officials said the closures will not eliminate any acute-care operations inside the level 3 trauma center. The five units that will be outsourced through partnerships with outside vendors are health information management, renal care, Synergy Medical Fitness Center, gift shop and Lifeline, a medical alert system for seniors.
Employees in those areas are also part of the workforce reduction, though many will have an opportunity to apply for similar positions with the new vendors, according to the hospital. Some of the employees whose positions are being eliminated will be eligible to fill open positions at the medical center or within St. Joseph Health, Mr. Mickens said.
“We recognize and honor the contributions, professionalism and commitment each employee has given and pray for their prosperity, both professionally and personally,” Mr. Mickens added.
Hospital officials in the statement said “a thoughtful and careful transition plan” has been developed for current patients in the units being shuttered and that the hospital would cease accepting new patients at those same units over the next few weeks.
Employees who are being cut will be given a 90-day advance notice of their eliminations instead of the typical 60-day notice, the hospital said. Eligible employees impacted by the reductions will also receive transitional support including severance based on years of service, benefit continuation, outplacement support and employee assistance program resources, the hospital said.
Queen of the Valley administrators said they are also in the process of reaching out to physicians, business partners and other members of the community who may need additional information as a result of these changes.
“We want to assure our patients, friends and neighbors that a robust offering of health care services will continue to be available locally at the Queen and that the quality they expect and rely on is always available here,” Mr. Mickens said. “We plan on being a strong, viable hospital and healing presence in this community for generations to come.”
The cuts and reconfigured units will have no impact on the hospital’s forthcoming Hermon Pavilion. Its opening was delayed late last year after an accidental death of a Medicare patient. Ms. deGier said a subsequent survey from the Centers for Medicare and Medicaid Services is nearly complete and that the $122 million pavilion will open shortly thereafter.
The latest job cuts are the second round of layoffs for Queen of the Valley in two years, following the elimination of 55 position in April 2012. That same year, Adventist Health–owned facilities in Vallejo, St. Helena and Clearlake also cut 48 jobs, citing similar economic conditions.
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