IU Health will reduce its workforce by hundreds of employees, the company announced Thursday.
Many of the cuts will come through early retirement. IU Health officials anticipate about 800 workers would be affected, although they could not provide an exact number. Workers affected by the cuts will be notified in early October and will get a severance package and assistance in finding new jobs.
“We regrettably have come to decision that reduction in workforce is necessary at this time,” said Jim Terwilliger, president of IU Health Methodist & IU Health University hospitals, two of the facilities that would be affected by the job cuts. The others: Riley Hospital for Children at IU Health, IU Health Saxony, IU Health North, IU Health Tipton, and Ball Memorial Hospital.
The company said declining reimbursement rates and inpatient volumes have significantly affected the operating budget. The health care provider has been consolidating programs in order to cut costs. In some instances, IU Health officials said they’ve also reduced labor costs with flexible scheduling and by leaving open positions unfilled.
“While all of these efforts are appreciated, they unfortunately have not been sufficient in achieving our targeted cost savings,” wrote IU Health President and CEO Dan Evans in an email to employees Thursday. “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.”
IU Health workers who are at least 62 years old and will not turn 65 by Dec. 31, 2013, will be offered an early retirement option. IU Health officials said early retirements, retraining programs and transfer options would reduce the number of total cuts.
“These are challenging times. While we cannot control the external environment, we can control our response to it,” Evans wrote.
“I can assure you this is not a decision we came to easily or one we take lightly,” said Terwilliger. “I think the reaction to this is one of sadness.”
Hospital officials said the Affordable Care Act was a partial factor, but not the only reason for the cuts.
“It’s one factor in a number of factors,” Terwilliger said. “The trends of growing competition, price transparency, price sensitivity, all those things… we are dealing with national trends and there’s no one factor.”
“I think health care is going to continue to be a growth industry it’s just going to grow in a different way,” said Riley Hospital for Children at IU Health President & CEO Jeff Sperring. “We are an incredible team. We’ll get through this together as a team.”