St. Joe's to lay off 37 hospital workers

St. Joseph Health will lay off 37 workers at its Sonoma County hospitals, part of a restructuring plan announced Wednesday to save $15 million over the next year in response to shrinking revenues under Obamacare.

The staff reductions, which affect 26 employees at Santa Rosa Memorial Hospital and 11 employees at Petaluma Valley Hospital, will save $3 million annually.

"This is one of the hardest things I've done in my career," said Todd Salnas, president of St. Joseph Health in Sonoma County.

Salnas said the move was necessary in light of declining reimbursements and an increasingly competitive marketplace where "everyone is trying to reduce the cost of health care."

St. Joseph Health leaders initiated numerous expense-cutting and revenue-generating strategies this spring and summer before turning to staff reductions, he said. Salnas would not specify what type of hospital workers were affected by the job cuts.

Wednesday's announcement was made amid ongoing and often confrontational labor negotiations with Memorial Hospital's Staff Nurses Association, which represents nearly 650 nurses in Santa Rosa.

Kery Poteracke, a 37-year Memorial Hospital nurse who is part of the negotiating team, said several nurses in specialty areas were losing their jobs as part of the staff reductions.

"We're wondering how they're going to get that work done," Poteracke said, adding that the nurses union was scheduled to meet with hospital administrators Wednesday afternoon regarding ongoing negotiations.

Hospital officials would not say exactly how many nurses are being let go, but did say nurses would be impacted. The hospital began notifying employees Monday.

In a statement, Salnas said that affected employees include "long-serving, dedicated staff who've cared for our patients and community for years."

St. Joseph Health employs 2,149 people in Sonoma County.

St. Joseph's current labor proposals to the nurses' union are not expected to change as a result of the staff reductions, Salnas said.

St. Joseph, which runs both Memorial Hospital and Petaluma Valley Hospital, recently struck a labor deal with nurses in Petaluma who are represented by the California Nurses Association. Labor talks at Memorial Hospital, which began last fall, have been marked by repeated strikes and difficult negotiations.

The cuts announced Wednesday were not a response to troubled negotiations, Salnas said.

"We don't want to have strikes," he said. "The decisions we're making today are based on long-term economic and health care industry trends. They are not a reaction to day-in, day-out negotiations."

During the past year, in employee forums at both hospitals, Salnas said he and fellow executives have outlined the ways health care reform and ongoing legislative decisions are shrinking St. Joseph Health's revenues.

These impacts, primarily to Medi-Cal and Medicare reimbursements, are expected to lower payments to the two local hospitals by more than $76 million over the next five years, hospital officials said.

In an effort to avoid additional staff reductions, hospital officials said they've implemented a number of measures aimed at reducing operating costs. These include management staff reorganizations and reductions in overtime and premium pay.

Others include:

--Consolidating or eliminating management positions. Salnas has taken a 5 percent pay cut, he said.

--Renegotiating contracts with staffing agencies and physician groups at both hospitals.

--Centralizing several non-clinical support functions, including clinical information systems, purchasing and telecommunications.

--Expanding outpatient diagnostic testing throughout Sonoma County and consolidating services at St. Joseph's ambulatory surgery center in Santa Rosa.

Hospital officials said affected employees would receive severance pay commensurate with their years of employment, as well as assistance in applying for other open St. Joseph positions.