Wednesday, November 5, 2008

Sumner Regional Medical Center plans 90 layoffs

The parent of Sumner Regional Medical Center in Gallatin said it would lay off 90 employees this week and cut the hours of almost two dozen others, citing a challenging operating environment for hospitals.

Most of those losing jobs were in nonmedical administrative or management jobs. Cuts will be made at the not-for-profit system's corporate offices; its flagship hospital in Gallatin; Riverview Regional Medical Center in Carthage, Tenn.; and Sumner Homecare and Hospice, officials said.

Some services will be affected. A center in Gallatin that offered lifestyle counseling to people with diabetes is closing and its operations will be folded into a similar center in Carthage, said David Wilhoite, interim chief financial officer for Sumner Regional Health Systems.

"It's a tough time for all businesses, but also especially health care," he said.

A total of 22 employees will see their work hours reduced in addition to the layoffs, the not-for-profit said.

Wilhoite said cuts in government reimbursements, slow payments by private insurers, lost revenue to competitors such as outpatient surgery centers, higher costs of supplies and reduced income from investments were factors.

"As a result, we must improve operations and reduce expenses to stabilize our financial performance," he said.

Bernie O'Neil, a managing director at turnaround consulting firm FTI Cambio in Brentwood, agreed with Sumner Regional officials that hospitals are facing harsh new economic realities.

"If they're not clinical folks, those are safer staff types to deal with because they're not laying hands on patients on a day-to-day basis," he said of the hospital's cuts.

Other steps are in works

Sumner Regional is taking other steps to improve its financial performance in addition to the job cuts, which will affect about 6 percent of the system's overall work force of 1,600 people, Wilhoite said. Those include stepping up efforts to collect hospital bills and minimizing "nonessential" expenses and capital investments, he said.

Lately, Sumner Regional had been in an expansion mode. This year alone, it added a medical office tower, parking facility and outpatient diagnostic center. Last month, Sumner Regional told its bond trustee that it needed more time to file financial statements as required under terms of its $150 million bond issue.

Wilhoite said the request isn't unusual given a transition in the chief financial officer post. The health system is simply reviewing its financial statements with its independent auditor, and plans to make the required filing by year's end, he said.

Wilhoite, who joined Sumner Regional in July from hospital consulting firm QHR of Brentwood, said the system had a small net loss from operations for the previous fiscal year and is finalizing results for its fiscal year that ended May 31.

"You're seeing a lot of organizations across the country dealing with similar issues," he said. "You can't ever stop paying attention to your financial performance."

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