MISHAWAKA | Franciscan Alliance cut 275 employees at its 11 hospitals and health care facilities in Indiana on Wednesday.
Of those, 112 employees worked in the northern Indiana region of the company, which includes five local hospital campuses, said Gene Diamond, Franciscan Alliance Northern Indiana Region's CEO.
"They were notified by their managers and supervisors, a letter from their respective presidents and a letter from the president and CEO of Franciscan Alliance organization," he said.
The Mishawaka-based company runs Franciscan St. Margaret Health hospitals in Dyer and Hammond, Franciscan St. Anthony Health hospitals in Crown Point and Michigan City and Franciscan Healthcare in Munster, among other facilities.
Cuts were made in administrative, management, supervisory, clinical and nonclinical sectors, he said.
"The process involved a lengthy analysis of cost savings — both labor and nonlabor strategies — and a thorough evaluation of how to best move forward in an environment of steadily decreasing Medicare reimbursements and declining inpatient volumes," Diamond said.
The full Franciscan reduction accounts for 1.4 percent of the company's workforce. The health care system employs about 20,000 workers, according to a statement.
The layoffs are being blamed on the "transformative shift in hospital economics."
Another 650 full-time equivalent positions will be eliminated by cutting back hours, closing open positions, through retirements and attrition, Franciscan announced.
"The remaining 19,000 employees will see cutbacks in benefits in 2014," according to a statement from the company.
Benefit reductions include the elimination of the 1.5 percent employer match to the 403b retirement savings program, elimination of the PTO buy-back program, higher employee contributions for health care insurance, no salary increases for management and a new defined benefit/defined contribution pension for all co-workers not vested by Jan. 1 in the defined benefit pension plan, according to the statement.
"The cost savings from these, and other recent pay practice changes, will help preserve hundreds of other jobs, which otherwise would have to be eliminated," the system announced.
Diamond said the process of identifying and implementing efficiencies and reducing overall costs will continue.
"The health care industry is changing rapidly, and economic pressures are forcing substantive changes in the field, including reduced reimbursements, new payer models, health care reform laws and shifts from inpatient to outpatient care," a Franciscan news release states.
“Franciscan Alliance has not been immune to such pressures and has found it necessary to align staffing levels to reflect lower patient volumes and reduced industrywide reimbursements brought on by reforms associated with the Affordable Care Act,” stated Kevin Leahy, Franciscan Alliance president and CEO.
To remain viable, Franciscan must cut its costs of care delivery by 15 to 20 percent during the next three years, the release states.
In September, Franciscan laid off 125 people at Franciscan St. James hospitals in Chicago Heights and Olympia Fields as well as several outpatient centers.
The company announced in June it was looking for an organization to acquire or enter into a joint venture on its two Illinois hospitals. More than $300 million was invested in St. James Health hospitals in Chicago Heights and Olympia Fields since 1994, but the facilities still incurred significant operating losses, the company stated.