Sanford and Avera hospitals wary about hiringSIOUX FALLS, S.D. (AP) — Sanford and Avera say they have avoided the job cuts that have hit other systems nationwide while also acknowledging that every new hire is under scrutiny because of stress in the medical industry.
By: JON WALKER, Argus Leader, Associated Press, WDAY
SIOUX FALLS, S.D. (AP) — Sanford and Avera say they have avoided the job cuts that have hit other systems nationwide while also acknowledging that every new hire is under scrutiny because of stress in the medical industry.
"We're not immune. The cost pressures and changes you're seeing nationally you're also seeing locally," said Nate White, chief operating officer for Sanford.
Sanford eliminated 50 management jobs in June to save $10 million a year, but apart from that has not gone through any significant reductions, White said.
"We've had no layoffs, no furloughs, none of that going on," he told the Argus Leader. "When we do have turnover, we do take a hard look at the structure to see if we can become more efficient."
Avera also reports no layoffs.
"We're not doing any of that at this point," said David Kapaska, CEO at Avera McKennan Hospital.
Both systems have hundreds of jobs that are vacated and refilled in a year.
When openings occur, "we're assessing each of those very carefully," Kapaska said.
Sanford has 11,500 employees in metro Sioux Falls and 26,000 in eight states. Avera employs 6,170 in its Sioux Falls region and 13,500 in five states. That makes the two systems the biggest local employers, among the largest in the Midwest and one reason the health care workforce here has more than doubled the past 10 years.
"There's been no slowdown," said Elisa Coequyt, senior recruiter for Spherion Staffing Services, an agency that works with both Avera and Sanford.
U.S. News and World Report said pressure from national health care reform is one factor forcing medical systems to cut payroll. The publication said Cleveland Clinic offered 3,000 employees buyouts while Vanderbilt cut 1,000 medical positions and Indiana University Health another 800. Quoting government data, correspondent Kimberly Leonard said hospitals coast to coast dropped 9,000 jobs in May and another 4,400 in July.
White said Sanford's management cuts in June were part of an effort to look 18 months ahead. Some managers left, others moved into new jobs and some jobs were redefined.
Openings are treated case by case, he said.
White replaced Becky Nelson this summer when Nelson, who turns 62 this month, retired as chief operating officer for Sanford's overall network. Randy Bury moved into White's old job as COO for the Sioux Falls region, and Brad Schipper took Bury's job as COO at the Sioux Falls hospital. Sanford spread around other duties making the net effect of Nelson's departure one less executive job.
On the other hand, when Brian Mortenson, 53, who had been Sanford Health Foundation president and point man in fundraising, departed recently to take a similar job in Arizona, the system began a national search to replace him. "It's a position we have to have," White said.
At Avera McKennan, officials filled 1,100 positions in the fiscal year ending in June and are on pace to fill another 1,000 this year.
"We have filled 250 since July 1 and have about 220 positions we are actively recruiting for," said Lynne Hagen, human resources officer for Avera McKennan.
The openings range from nursing and other medical roles to administration and food service. Hiring this year comes with additional caution.
"There are positions we are holding on, to make sure we can afford what we have ... and to give ourselves a few months to see how things are working with health reform before we add to the payroll," Hagen said. "I want to say it's around 125 to 130 positions."
Some of those holds are new positions while others are backfills to replace someone who left.
The opening last week of the Internet marketplace to help people buy health insurance could bring new revenue to Avera and Sanford, both of which are sellers of the insurance and providers for those needing care. Whether that's a net gain or loss won't be known for months. Hospitals surrendered a share of their Medicare reimbursements to help pay for the subsidies consumers will find on the Internet exchange. In many states, including South Dakota, hospitals are waiting to see whether the government will expand Medicaid to help the poor. Those details all affect hiring.
"We don't have a hiring freeze, but we do have a process in place, where anytime a position is vacated or becomes open, a committee discusses whether we should refill it," Hagen said.
"We always look for innovative ways to do things and do it at a lesser cost. We talk about declining reimbursements and what that's going to look like a year or two years from now. We want to make sure we don't have too many employees and can't afford them."
Kapaska said the reimbursements issue has been building at least 10 years. The Affordable Care Act now comes along with the online exchange to use money from the federal government to subsidize the purchase of health insurance. The act also guarantees coverage for people who couldn't get insurance before because of medical conditions.
"People without insurance, and especially people with pre-existing conditions, are marginalized and not economically empowered through insurance to seek out medical care early," Kapaska said. "They wait as long as they can tolerate the situation. Then they come in sicker. My hope is that if they are empowered, we can cut their illness off at the pass. I think that's the theoretical hope."
Hospitals will watch to see how all of that changes consumer habits and the bottom line. Medicare, which pays hospital bills for the elderly, and Medicaid, which covers the poor, combine to provide half of a hospital's revenue. Most of the rest comes from patients and their insurance companies. Kapaska said hospitals once could count on those sources together for a 4 percent net margin. Cuts in Medicare and Medicaid rates have flattened that.
"Now we have zero to minus one. That's a five-point swing," he said.
Hospitals must find places to adjust, he said. Hospitals spend about 20 percent of their money on building and utilities and up to 55 percent on personnel and benefits, he said. The other 25 percent goes to supplies and equipment. "You can't rob that forever," Kapaska said.
Insurance reforms come alongside shorter hospital stays, less invasive surgeries and other medical progress occurring in the industry apart from external politics.
"You do see fewer days consumed by patients, so the mission of hospitals is expanding well beyond the mission of the four walls of the traditional institution," said Dave Hewett, president and CEO of the South Dakota Association of Healthcare Organizations.
The biggest barrier to completing the reform cycle is a reimbursement system still based on volume, he said. He thinks consumers and hospitals alike would benefit if the system could begin to reward wellness over number of procedures. That, in turn, would change which kinds of workers hospitals hire.
"Ultimately you need finances to sustain your mission," Hewett said. "As long as we are in this fee-for-service world you will see hospitals with fewer needs for certain health care professionals. But as we move into a system that encourages ... individuals to stay well, it's not that we're going to need fewer professionals. We're just going to need professionals trained to do different things."
Avera and Sanford both said the cautious mode on employment has not slowed other projects. Each has several in the works or upcoming. Sanford opened its $19 million basketball Pentagon last month in northwest Sioux Falls and is building a clinic at 69th and Louise. Avera opened a $3.6 million basketball and volleyball center in late September at 85th and Minnesota and is building a two-story clinic at 69th and Cliff.