Akron General Health System laid off 132 employees on Friday as it deals with a $4 million loss in 2012 and anticipates future financial challenges from health-care reform.
The staffing reduction represents about 2.5 percent of Akron General’s total work force of about 5,250.
The layoffs are spread throughout the health system, which includes Akron General Medical Center, Lodi Community Hospital, Edwin Shaw Rehabilitation Institute, Visiting Nurse Service and Affiliates, three Health & Wellness centers, a physician group and other outpatient locations.
“We are being forced to do something here that none of us wants to do,” said Dr. Thomas “Tim” Stover, the health system’s president and chief executive. “But there really isn’t a choice. We have to be prepared for what’s coming.”
Akron General is Summit County’s second-largest employer, behind Summa Health System.
The downsizing at Akron General comes just two weeks after Summa laid off 54 employees as it also contends with lower-than-expected revenues and prepares for federal health reform.
Hospitals throughout the nation are cutting costs as they anticipate reductions in payments from Medicare and Medicaid, which represent about 60 percent of revenues at most hospitals, said Thomas S. Campanella, director of the health-care MBA program at Baldwin-Wallace University in Berea.
“The story of what’s occurring in Akron is occurring all over the U.S.” Campanella said. “They see the writing on the wall that they’re going to be asked to do more with a lot less money.”
Even more changes could be in store for the county’s largest employers.
As Akron General plans for the future, a partnership with another health system is being considered, Stover said. Talks are informal and preliminary, with no potential partners being named.
“I’m talking to people every day to do everything I can to make sure that Akron General is here for the next 100 years and doing exactly what we’ve done for the past 100 years, and that’s give the community of Akron what I think has been incredible care,” Stover said. “To think that I could do that in a vacuum going forward, based on what’s hitting us and what’s coming down the road, would be naive. So in order to advance and keep Akron General viable, keep it here, I have to be thinking about that possibility.”
Summa is continuing its own search for a larger, nonprofit health-care system to become its partner and minority owner. A decision from Summa is expected by the end of March.
Any affiliation talks at Akron General won’t involve the sale of the health system, Stover said.
“We’re not for sale,” Stover said. “The board is adamantly against that.
“… I think we’re in a position where we can actually put together — if we need to — a true partnership,” he said.
Regardless, Stover said, Akron General is moving forward with plans to increase revenue and control expenses.
Lower-than-expected volume, particularly for elective surgeries, in the last three months of 2012 resulted in Akron General losing $4 million on revenues of about $560 million, according to hospital officials.
Many hospitals are facing a decline in nonemergency procedures as patients with deductibles climbing to $1,000 or more decide to delay care, Campanella said.
Akron General expects to save about $12 million in wages and benefits from this week’s layoffs, as well as by not filling about 50 open positions, according to hospital officials.
The staff reduction includes eight registered nurses out of 1,097 on the staff.
Stover said the health system’s top administrators also took a large cut in their benefits package at the beginning of the year to save Akron General about $2 million.
Moving forward, Stover said, the health system’s plans include boosting revenues by growing market share in key areas. Services targeted for growth include neuroscience, oncology, wellness, cardiovascular, women’s, urology and musculoskeletal.
“I don’t believe success will be related to cuts completely,” Stover said. “I think success has to be a combination of cuts and growth. We’re looking at both.”
Cheryl Powell can be reached at 330-996-3902 or firstname.lastname@example.org. Follow Powell on Twitter at twitter.com/abjcherylpowell.