IU Health to eliminate 800 jobs


One of the state's leading health providers announced the elimination of 800 jobs Thursday.

IU Health will eliminate 800 jobs, effective December 1. Affected employees will be notified by October 1. Some employees will be offered early retirement, for the first time, at age 62. The cuts will impact IU Health workers at Methodist, University, Riley, North, Saxony, Tipton and Ball Memorial hospitals.

Employees were notified of the cuts at 10 a.m. Thursday, but the exact people who will be getting pink slips has yet to be determined.

Riley Hospital promotes itself as a place where hope happens. But for staff on Thursday, a companion emotion is fear as they await word on which jobs will be cut.

"We recognize we will lose talented and dedicated team members. These are our friends and our colleagues," said Riley President and CEO Dr. Jeff Sperring.

"I can tell you this is going to affect every level of our organization, across the board. Every person at IU Health will feel the impact of this," said Jim Terwilliger, president of IU Health Methodist and University hospitals.

Hospital leaders say 50 percent of costs are related to labor and the cuts are prudent, because admissions are declining, as is money from Medicare. Complicating the equation is that under the Affordable Care Act, hospitals will be rewarded for keeping patients out of the hospital.

"No one wants it to end up here, but to position ourselves to be a professional organization, to provide access to the patients who come here and seek care, I think people understand that we have to make a decision like this at this time," said Terwilliger.

Toni Dowlen has transported patients at IU Health for eight years. She doesn't know if her job will be one that's eliminated.

"It's kind of scary, you know? Right now, I don't know what is going on, so it's kind of scary," she said.

She shares the uncertainty with nearly 36,000 other IU Health workers.

"We are trying to position the organization to be successful in what is a rapidly-changing industry," she said.

The news isn't surprising to many, like Dr. Lawrence Walsh.

"I think in the community, this has been happening, so I think we kind of knew things were going to happen at some point," Walsh said.

"I'm quite confident they started with the management ranks," said industry expert Doug Leonard.

Leonard represents the state's 172 hospitals as head of the Indiana Hospital Association.

"Whenever a cut in staff is considered in a hospital, you always start as far away from the patient as possible," Leonard said.

That is at least reassuring to students like Obasaju Patience, who is pursuing a medical degree.

"There is still a physician shortage, so regardless of jobs being cut, there are still jobs that are needed, so I kind of hope that when we get out and in real practice, there will still be jobs for us," Patience said.

In the meantime, hospital visits are down, as are reimbursements, so workers wait to see if their income and career is at risk - or safe for now.

The cuts will save IU Health a billion dollars over five years.

The layoffs at IU Health come after St. Vincent announced that 850 of its employees were losing their jobs across the 22-hospital system. That's five percent of its total workforce of 17,000 people. St. Vincent blamed the layoffs on what it called economic and competitive pressures.

Eyewitness News asked St. Francis Health for a statement about its situation. At this time, St. Francis is not planning any layoffs:

"For several months, Franciscan St. Francis Health has been evaluating various ways to achieve cost savings at its hospitals in Indianapolis, Mooresville and Carmel. Such measures will enable us to eliminate waste and to operate more efficiently well into the future. Presently, there have been no workforce reductions.

Declining reimbursements and the threat of decreasing inpatient volumes are among the many challenges faced by our hospitals and the entire health care industry. As the medical arena evolves, we too must adjust. As a division of Franciscan Alliance – whose health care ministry spans more than 138 years – Franciscan St. Francis Health has a long history of adapting as necessary to continue its health care ministry.

However, the mission of Franciscan St. Francis Health will remain constant.  Whatever cost savings steps we take will not compromise our goal to provide patients the top-notch, timely and affordable care they expect and deserve.

IU Health President and CEO Dan Evans sent this email to employees:

"IU Health Team Members:

In my State of the System report to you last January, I outlined our goal of improving productivity by 25 percent – or roughly one billion dollars – over the next five years. We adopted this goal because we fully expect that the future reimbursement environment, from all payers, will look much like Medicare does today. In addition, we believe that managing the health of populations – helping to keep Hoosiers healthy rather than caring for them only when they are ill – is how we will increasingly be reimbursed by public and private payers in the future. To manage "population health" well, we will need to significantly invest in new technologies and processes – and we will need to do so in the face of worsening reimbursements.

Since January, we have made some progress. We have launched our Lean continuous improvement efforts, which are helping us to identify waste and improve productivity. And we have pursued other cost savings initiatives as well, such as centralizing our lab operations and consolidating other programs. We've also reduced some labor costs with flexible scheduling and by not filling open positions.

While all of these efforts are appreciated, they unfortunately have not been sufficient in achieving our targeted cost savings. This, along with declining reimbursement rates and inpatient volumes, has us significantly behind our budgeted operating performance. So much so that many hospitals and divisions across our system now must take more aggressive cost reduction measures, including workforce reductions. They include the academic health center, IU Health Ball Memorial Hospital, the North Central Region (IU Health North, Saxony and Tipton hospitals) and System Services.

Our team members – our colleagues and friends – are the most important asset to our organization's mission, and I assure you that the decision to reduce our workforce was reached only after much discussion and thoughtful analysis. While regrettable, these reductions are necessary if we are to offer affordable and preeminent care to the patients and families we have the honor to serve.

We are profoundly aware of the impact our decisions will have on the lives of our team members and their families. Consistent with our values of mutual trust and respect, we will make every effort to support all IU Health team members through this difficult transition.

Team members whose jobs are impacted by this workforce reduction will be notified in early October and will be provided with severance and outplacement assistance.

To minimize the number of team members affected by this workforce reduction, IU Health, for the first time, is offering an early retirement option to qualified team members who are at least 62 years old and will not turn 65 by Dec. 31, 2013, working in certain positions at the entities undergoing workforce reductions. Detailed information about this option, including the application deadline and eligibility criteria, will be provided this week to eligible team members.

We do not have a final, precise number of the reductions. At this time we estimate approximately 800 people will be impacted, but many will take advantage of our early retirement program, retraining opportunities and transfers, therefore reducing the number of reductions needed.

These are challenging times. While we cannot control the external environment, we can control our response to it. Now more than ever, it is important that we remain focused on our Lean efforts, which are helping us adapt to this changing environment and more consistently deliver on our promise to patients. We also will continue to aggressively pursue our move to managing population health. We must maintain our focus on these crucial initiatives.

IU Health is a world-class organization with a long history of providing high-quality care. Our targets for achieving preeminent patient care, quality and service have not – and will not – change. I am confident that the difficult decisions we are making now will position us to continue to provide access to preeminent, nationally recognized care well into the future.

I know you have many questions and concerns. Your leaders are here to help guide you through these challenges. I will keep you updated in the weeks ahead; and, as always, I thank you for your commitment and hard work on behalf of the patients and families we serve."