Rise in Patients Without Commercial Insurance Plus Government Cuts in Medicaid, Medicare Funding For

Rise in Patients Without Commercial Insurance Plus Government Cuts in Medicaid, Medicare Funding Force Swedish to Make Staffing Reductions

SEATTLE, Sept. 19, 2011 – Citing a rise in the number of patients without commercial insurance and government cuts in health-care funding, Swedish today announced a plan to restructure its workforce to better adapt to the changing economy.

Swedish officials said the same forces that are battering the United States economy are impacting health-care organizations across the country, including those in western Washington. The bottom line for Swedish is that its operations are now facing a $19 million budget gap.

One of the biggest reasons is that fewer patients coming to Swedish are commercially insured. “High unemployment in the region means we are seeing more and more Medicaid and charity-care patients and are writing off more cases as ‘bad debt’ due to people being unable to pay their medical bills,” said Swedish President and CEO Rod Hochman, M.D.

In addition, with the aging population, there are more people in the community in need of health care, and as a result, Swedish is seeing more patients on Medicare. This is an issue because, while Medicare pays better than Medicaid, it still does not cover the full cost of providing care or reimburse at the same level as commercial insurance.

Swedish is also being impacted by recent cuts in Medicaid funding. The reductions went into effect July 1of this year and resulted in an immediate loss for Swedish of $1.7 million for the month of July alone. These cuts – combined with the surge in Medicaid/Medicare patients – are such a game changer that hospitals throughout Washington state are being forced to make painful changes. Multiple area providers, including MultiCare Health System in Pierce County and Providence Regional Medical Center Everett, have announced layoffs in recent weeks.

Swedish officials do not anticipate that lawmakers are likely to increase funding for Medicaid and Medicare any time soon. In fact, the medical center is bracing for deeper cuts. Just this morning, President Obama announced cuts in mandatory benefit programs, including $248 billion in Medicare and $72 billion in Medicaid and other health programs as part of his deficit reduction package.

“Despite our best efforts, it is not possible to shield Swedish from the seismic shift that is altering the national economy. To protect our mission and ability to continue meeting the health-care needs of this region, our only option is to face the crisis head on and adjust our operations and cost structure accordingly,” said Dr. Hochman. “Swedish has done a lot to reduce expenses already, but the rapidly changing economic climate is requiring us to do more. We believe the next step is a system-wide restructure that will involve a difficult but necessary workforce reduction.”

As part of this plan, Swedish leaders are evaluating approximately 300 positions, or about 3 percent of its workforce. These include union and non-union jobs, as well as vacant positions, across the organization.

This does not mean Swedish is letting go of 300 employees. Medical center leaders said they will work hard to re-deploy as many affected individuals as possible to other parts of the system where there remains a need for increased staffing, such as its new hospital campus in Issaquah. Rather than filling those positions with external hires, Swedish will make these opportunities available to current employees. Swedish has a good track record for doing this type of internal transfer effectively in the past.

“Our expectation is that the number of people who actually leave the organization will be much lower than 300. But we won’t know the exact number until we go through the methodical process of re-deployment,” said Dr. Hochman.

This is not a situation where employees will be let go in a single day or week. Medical center leaders are now working to identify all impacted individuals and will then go through a thoughtful process to assure they are treated fairly, respectfully and according to Swedish policies and procedures. In those areas with union employees, Swedish will follow all applicable contract language and will work collaboratively with the union using a change process that has worked effectively in the past.

In addition, impacted employees will be given a reasonable notice period that they can use to help make any transitions, and Swedish will provide financial and career-transition support to help those who will be moving onto the next chapter in their professional life.

“As the largest non-profit health-care provider in Greater Seattle, the community depends on us for access to their care. Despite how tumultuous the past year has been for health care, our commitment to quality care for all people regardless of insurance status has not wavered,” said Dr. Hochman. “This is not an easy decision for the organization. We know it will affect people. But in this extremely challenging economic environment, it’s a necessary decision to help ensure Swedish remains a community care provider for this region.”

About Swedish Health Services

Founded in 1910, Swedish Health Services is a private, non-profit health system and the largest health-care provider in the Greater Seattle area. It is comprised of five hospital campuses (First Hill, Ballard, Cherry Hill, Edmonds and Issaquah), freestanding emergency departments and ambulatory care centers in Redmond and Mill Creek, Swedish Visiting Nurse Services, and Swedish Medical Group – a network of more than 70 primary-care and specialty clinics. In addition to general medical and surgical care, Swedish is a regional referral center that provides specialized treatment in areas such as cardiovascular care, cancer care, neuroscience, orthopedics, high-risk obstetrics, pediatric specialties, organ transplantation and clinical research. As part of its mission to improve the health and well-being of each person it serves, Swedish provided more than $112 million in community benefit services in 2010. For more information, visit www.swedish.org and www.swedishcares.org.

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Media Coverage

  • To read a related article posted Sept. 19 on the Puget Sound Business Journal Web site, click here.
  • To read a related article posted Sept. 19 on the Seattle/Local Health Guide Web site, click here.
  • To read a related article posted Sept. 20 on The Seattle Times Web site, click here.
  • To read a related transcript posted Sept. 20 on the KING Television (Ch. 5, NBC) Web site, click here.
  • To read a related article posted Sept. 20 on EdmondsPatch.com, click here.
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