Baptist Health set to cut 170 positions

System cites new rules, rising costs

Baptist Health, the state’s largest private nonprofit hospital system, announced Tuesday that it will eliminate 170 jobs from its 7,300-person workforce.

The Little Rock-based organization issued a short news release and declined to answer questions beyond that.

Baptist spokesman Mark Loman said the jobs will be cut “over the next several days.”

The release cited “substantially less government reimbursement, burdensome government regulations, rising costs of supplies, increasing charity care and bad debt and the need for technology and medical innovations.”

The steps are being taken to “reduce nonsalary expenses [and] gain efficiencies in all aspects of operations through consolidation of services and simplification of processes,” the release states. As a result, “we believe these efforts will serve to make Baptist Health more effective.”

The job cuts will be made across the organization, which includes hospitals

in Little Rock, North Little Rock, Arkadelphia and Heber Springs.

Loman said the hospital will probably file its Form 990 for fiscal 2012, which ended Dec. 31, with the Internal Revenue Service in the fall.

Last year, Baptist reported a surplus of $27.2 million for fiscal 2011 but said it was dealing with rising costs because of charity care and bad debt.

The federal Patient Protection and Affordable Care Act on Jan. 1 will mandate universal health insurance and start the elimination of uncompensated care.

In Arkansas, for example, approximately 500,000 residents have no health insurance.

Roughly half of them, those who make up to 138 percent of the federal poverty level, will be able to buy private insurance through a state exchange through the use of Medicaid funds. Those whose income is between 138 percent and 400 percent of the poverty level will qualify for breaks on premiums.

“The cavalry is coming, but we have to look at what’s in play today,” said Paul Cunningham, executive vice president of the Arkansas Hospital Association.

The Affordable Care Act of 2010 laid the groundwork for universal coverage, but in the meantime it called for $155 billion in cuts to Medicare payments to hospitals over 10 years, Cunningham said. Combined with federal tax cuts that included additional Medicare payment reductions for hospitals, the impact on Arkansas will be $2.5 billion during that period, he said.

“Hospitals are already beginning to see the effects” of those austerity moves, he said, and “at the same time, they are feeling the effects of increased uncompensated care.”

St. Vincent Health System, with 2,750 employees, the second-largest private hospital system in the state, did its own belt-tightening during a spate of subpar financial years, said Jon Timmis, senior vice president and chief strategy officer for the Little Rock-based system.

St. Vincent sustained a cumulative loss of $67 million between its fiscal 2008 and 2011 before achieving a $3.4 million surplus in the fiscal year that ended June 30, 2012.

Steps taken to cut deficits included reduction in the number of employees, Timmis said, 30 to 40 by job cuts and others through not filling vacancies and other strategies.

As a result, Timmis said, a recent study by McKinsey and Co., a global management consulting firm, showed that St. Vincent’s per-patient costs are 16 percent lower than Baptist Health’s.