Hospital cuts staff for cost savings

NEWTON, N.J. — Faced with inadequate payment from insurance companies, government cuts to Medicare, Medicaid and Charity Care payments and rising costs, Newton Memorial Hospital has cut staff in a move to create efficiencies and reduce expenses, the hospital announced Tuesday. Newton Memorial also operates the Milford Health and Wellness Center on East Catharine Street, where some positions were cut. Despite success at reducing costs with its Operations Improvement Plan (OIP) over the past year, and when possible, not filling open positions, the hospital eliminated positions in several management and non-direct patient care areas. On Friday, Jan. 4, eight jobs were eliminated. The hospital also focused on internal operations, including the reduction of non-labor supply expenses, improvements in the collection of revenues and clinical resource management enhancements. No employment terminations were based on individual job performance. Since positions were eliminated each employee received a severance package and access to health benefits to provide him/her with some income protection, comfort and time to transition into another job. The reorganization of these functions and re-assignment of responsibilities will keep these job eliminations from affecting delivery of patient care. “This has been a very tough year for most hospitals in New Jersey, including Newton Memorial,” said hospital President & CEO Tom Senker. “Our management team and staff throughout the hospital have worked diligently over the past few months to reduce expenses and improve processes while still maintaining the highest levels of patient care. “Unfortunately, these efforts were not enough to overcome the financial challenges we are facing. The elimination of these positions was a very difficult decision for us,” he added. “But this is a necessary move to strengthen our financial outlook and to ensure that our community will continue to have access to the quality health care services they rely upon.” One of the largest impacts felt by Newton Memorial Hospital was the decision by the state’s Division of Medical Assistance and Health Services to cut its Acute Partial and Outpatient Medicaid reimbursements, which resulted in a $3 million loss to the hospital. “Without that particular cut, our financial situation would be a whole lot different,” Senker said. Recognizing the challenges posed by forces outside the hospital, the management team instituted the OIP several months ago to relieve the hospital’s financial pressures. It also compared its performance with industry-best practices and found that Newton Memorial compared favorably. However, the hospital identified some opportunities for improvement. In Milford, for example, Newton Memorial Hospital will continue to operate a lab-connection draw site at the Milford Health & Wellness Center. But the Clinical Laboratory at that site has been consolidated with the lab at the hospital’s Main Campus. This will have no impact on the functioning of the Milford Health & Wellness Center, but positions in Milford related to the Clinical Laboratory were eliminated. Two of the three affected employees accepted positions at the hospital’s main campus. Newton Memorial Hospital is not alone in taking the kind of tough actions like those which occurred last week. The New Jersey Hospital Association has estimated the number of hospital jobs eliminated statewide over the last five years at 6,500, most of which were administrative, managerial and support staff. There were other contributing factors that led to the reorganization, including federal cuts to Medicare reimbursements, a drastic increase in employee medical costs and a loss of business in same day surgery and gastrointestinal patients to privately held facilities. “There is a reason why health care is emerging as the Number One campaign issue in the Presidential races, even more so than the conflict in the Middle East,” hospital spokesman John Brand said. “We here in Sussex County are being affected by a health care system that needs fixing.”