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Under financial pressure, Bozeman Health lays off dozens of employees

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The Big Sky Medical Center, part of the Bozeman Health network. PHOTO BY JULIA BARTON

By Bella Butler MANAGING EDITOR

BOZEMAN – Bozeman Health last week laid off nearly 30 leadership staff due to financial pressures on the healthcare industry. According to its CEO, this was an unprecedented decision for the largest private employer in Gallatin County.

In an internal Aug. 2 email sent by Bozeman Health CEO John Hill to Bozeman Health staff, and provided to EBS, Hill announced the layoff of 28 employees as well as the decision to not fill 25 open positions, totaling a reduction in 53 full-time equivalent positions. The reduction in force included one staff member at the Big Sky Medical Center.

The healthcare industry is facing an “unprecedented crisis,” Hill wrote in the email, reporting that Bozeman Health’s costs this year have surpassed revenue by 8 percent, resulting in a net loss of $14.8 million in the first six months of 2022.

“Over the last 26 months during the COVID-19 pandemic, we have moved from a public health crisis to an economic crisis of our healthcare delivery system across the nation,” Hill told EBS in an Aug. 4 interview. “Those same dynamics are happening across our state and obviously right here in Gallatin County with Bozeman Health.”

Hill said as high burnout rates among healthcare professionals throughout the pandemic led many to leave the industry altogether, Bozeman Health was forced to fill labor gaps with contract labor that costs three to four times the rates paid to the employer’s clinicians. This resulted in a 20 percent increase to labor costs, according to Hill, tracking closely with an American Hospital Association report that found hospital labor costs per patient had increased nearly 20 percent from 2019 through 2021.

Bozeman Health’s challenges don’t exist in a vacuum. Mariana Carerra, an associate professor at Montana State University who teaches health economics, said when she heard Bozeman Health’s announcement she was at first surprised to hear about layoffs in a labor market that needs staff so badly, but given the current state of the healthcare industry, particularly related to labor costs, it made sense.

“Hospitals are struggling financially right now because there’s a shortage of healthcare workers that was foreseen even before this recent economic situation where we’re seeing worker shortages all over the economy, so that has only exacerbated the problem for hospitals having to staff medical care for their patients,” Carerra told EBS. “I think it’s sort of a perfect storm for them.”

A report published a month ago by outplacement firm Challenger, Gray and Christmas found that the healthcare industry, including product manufacturing, announced the most job cuts in 2022 at 19,390 at the end of June, up 54 percent from 2021.

Hill said the nonprofit healthcare system looked to cut costs elsewhere before looking to labor.

“We have done everything we possibly can to reduce discretionary spending, redesign the way that we deliver care in the clinics and the hospitals, anything that we could potentially hold on when it came to expenditures, we have done that,” he said.

But on top of increasing costs, Hill said Bozeman Health experienced “softer volumes” this past spring, a trend that hit the healthcare industry across the nation. As a last resort, the hospital turned to examine labor.

“We did what we did to preserve the positions at the point of care,” he said. “Leadership, while it’s extraordinarily important for a healthcare system like ours, and those people are highly valued, it was the ability to preserve positions that do care for our community.”

In fact, Bozeman Health is currently hiring about 487 positions, according to a Bozeman Health spokesperson, including nurses, patient care technicians and licensed clinical social workers, among many others.   

Hill said he has no recollection of any other layoffs in Bozeman Health history.

“I think what that says about the current circumstances is what an extraordinary time in our lives to have gone through—one, such a deadly pandemic,” Hill said. “It has consumed the resources of public health and healthcare systems in our community and I think it demonstrates how much our Bozeman healthcare professionals have done on behalf of their community … It really means that we are moving into this economic crisis because we’ve given so much, we’ve saved so many lives, and now the healthcare system needs to be healed as well.”

Hill said he expects patients will see “no difference” following the layoffs, but current staff will absorb some additional responsibilities. Bozeman Health did not disclose the name or position of the laid off employee from the Big Sky Medical Center but Hill stated it was a “leadership support role.” Of Bozeman Health’s roughly 2,400 employees, 120 work at the Big Sky Medical Center.

“The community of Big Sky should not see any impact to the level of service, accessibility to care, the compassionate way that we serve that community—there should be no changes,” Hill said.

While Hill reported that demand was starting to climb again in June and July, he wrote in his email to staff that “becoming more efficient in how we operate will remain permanent,” adding that healthcare has changed forever.

“I think healthcare consumers want affordability and they want accessibility and they want that on demand, whether that be in in a virtual setting or in a clinic or hospital setting,” he said. In order to meet that kind of demand, Hill says Bozeman Health and other hospitals will continue to be charged with keeping costs low.

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