Palm Drive to lay off, cut hours for 40

SEBASTOPOL -- Palm Drive Hospital said it would move forward with layoffs and labor reductions, impacting 40 employees in 15 departments as the 37-bed facility seeks to shore up its finances.

The layoffs and work-schedule reductions represent a 15 percent reduction of the 267 total staff and includes eight nurses, according to Thomas Harlan, chief executive officer. The reductions equate to a loss of 20 full-time employees, or 14 percent.

In an email to staff, Mr. Harlan said the reduction in staff and work hours was a difficult but necessary step for the hospital, which is overseen by the Palm Drive Health Care District. 

"I know that this is a very difficult day for all of us as a necessary reduction in force was implemented," he wrote. "... As you know, labor costs are the major cost of operating any hospital."

The hospital is looking to "right-size" itself as it continues to face financial uncertainty, part of which includes a rapidly changing landscape for hospitals under the federal Affordable Care Act.  That plan could include reducing the number of staffed beds from 37 to 14 in an attempt to save on labor costs. 

"The 'right-sized' hospital concept will not curtail volume or interfere with the quality of our outstanding services," Mr. Harlan wrote. "These changes, instead, will make us stronger to improve our ability to withstand the turbulence ahead in the world of health care. Because our financial condition is so fragile, I want to assure you that the decision to do this was absolutely required, debated and certainly not taken lightly. This is a key component of the effort needed to improve the likelihood of our long-term survival. We are not alone, as almost every hospital in the state is experiencing financial distress and being forced to significantly reduce costs."

According to an audited report for the fiscal year ended last June, the hospital posted an operating loss of more than $4.2 million, an increase from about $3.3 million the prior year. The loss is attributed to declining patient volumes and revenue.

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