GOLD BEACH – Curry General Hospital this week is laying off 10 percent of its employees in an effort to stem substantial losses suffered by the hospital over the past two years.

The Curry Health District Board of Directors voted last week to accept the recommendation of their consultants and cut 22 of the 210 employees at the hospital.

“Curry Health District and its employees are indeed facing a financial challenge along with many other small and rural hospitals in Oregon,” Bill McMillan, chief executive officer of Curry General Hospital Health Network said in an email to the Pilot on Tuesday.

“In the past two years we have recruited 11 new physicians to our area, opened the Curry Medical Center in Brookings and established a number of new services such as respiratory therapy and Cardiopulmonary rehabilitation,” he said.

“At the same time we have seen the number of patients without insurance and consequently the ability to pay for care skyrocket, and the volume of admissions and ER visits at the Gold Beach facility has declined,” McMillan said.

“The Board and Administration are committed to maintaining quality of care and patient safety in all our facilities but recognize that the District needs to be as efficient as we can. Using labor productivity standards gleaned from a cross section of small but efficient hospitals, we are adjusting our staffing patterns to ensure the District can remain viable,” McMillan said.

“This will result in a cost savings of about $1.2 million on an annualized basis, but unfortunately a job loss of 22 positions,” he said. “Affected staff are being notified this week. The District in collaboration with the state’s Employment Services is providing support for affected employees including employment counseling, and through the District’s mental health services, emotional support and counseling for any employee or former employee.”

McMillan did not specify which jobs were affected by the layoffs. 

Marlyn Schafer, a member of the board, said the layoffs were not something the board wanted to do.

“It’s unfortunate that we have to do that, but in order to save medical care for everybody, we have to make the cutbacks,” she said. “I just hate it. I hate it. But these few jobs will save 200 jobs.”

The health district was told by its auditors in October that it had lost a substantial amount of money during the past two fiscal years, which could endanger the district’s ability to stay in business.

“The District has incurred substantial operating losses during the years ended June 30, 2011 and 2010, which have been only partially offset by the receipt of property taxes, and used substantial amounts of working capital in its operations and experienced a decrease in net assets during the year ended June 30, 2011,” said the report presented by Steven A. Evans, a partner in the Delap LLP firm.

“Further, at June 30, 2011, cash and cash equivalents and assets limited as to use have decreased significantly, while debt service requirements have significantly increased,” the audit said.

“These factors raise substantial doubt about the District’s ability to continue as a going concern,” Evans wrote.

He noted the District’s management is establishing productivity standards and is continuing to analyze less profitable operations, the District’s rate structure, potential new profitable services, and other strategies to improve the District’s operating results.

“The ability of the District to continue as a going concern is dependent upon the success of these plans,” Evans wrote.

The audit showed that the hospital district reported an operating loss of $1,132,000 in the last fiscal year, although Chief Financial Officer Mark Sayler notes that with the property tax collected by the district, that is reduced to $936,000. The loss in Fiscal Year 2010 was $552,000. 

The district, which operates Curry General Hospital in Gold Beach, Curry Medical Center in Brookings and Curry Family Medical in Port Orford, had operating income of $466,000 in fiscal year 2009.

The district notes that much of the problem is the economy, and decreased payments from government health plans.

It noted that while gross patient service revenue increased by $2.6 million, or 7.2 percent, in fiscal year 2011, the District’s deductions from revenue increased by approximately $1.7 million.

“Of the $1.7 million increase in deductions from revenue, approximately $1.1 million related to an increase in Medicare, OHP (Oregon Health Plan) and Medicaid contractual allowances, as such government payers continue to decrease reimbursement as a percentage of the District’s actual charges,” the district’s management reported.

The Curry Health District hired Quorum Health Resources (QHR) of Brentwood, Tenn., as consultants to help it pull its way out of the losses.

QHR recently prepared a staffing assessment of the hospital which was presented to the board of directors last week.

The report said that the hospital has had challenges implementing tools for managing labor and was unsure if current staffing levels were appropriate.

“Hospital leadership and the management team generally agree there are areas of the hospital that have opportunity for staffing efficiencies,” the report said.

It said the hospital should implement recommended productivity targets and use a biweekly monitoring tool to manage labor productivity.

The report said managing to recommendations has a potential savings opportunity of more than 20 employees, or $1.2 million in salaries.

QHR said that the hospital did not track productivity on a routine basis and that hiring decisions are often made based on the amount of staff departments have maintained in the past.

It made several other recommendations, including some that would reduce overtime.

The consultants said that, in addition to the $1.2 million saved on reducing staff, the hospital would also save on the benefits those staff members were currently receiving, estimated to be between 23 and 25 percent of the salary savings.

The hospital district board unanimously voted to accept the report, which triggered the layoffs.