At a time when people around the world are especially appreciative of health care workers, it may come as a shock to see the local hospital laying off 100 employees.
But significant loss of revenue caused by COVID-19 led Valley View Hospital to lay off about 10% of its workforce — an “unprecedented” step for an unprecedented situation, CEO Dr. Brian Murphy said in an interview Wednesday.
In a May 8 email sent to employees, Murphy said the COVID-19 pandemic resulted in a projected revenue reduction of $30-$45 million this year.
That’s not the only revenue hit Valley View anticipates. To add insult to injury, “We project additional losses of $13.5 million annually due to increases in Medicaid enrollment,” the email said.
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To manage this reduction, cuts were made across the board, Murphy said, including at branches in Carbondale, Silt, Willits and Eagle, although all clinics will remain open.
“We had several senior executive-level people laid off. We looked for every opportunity. We made cuts in almost every single area in our system. When there was an opportunity to consolidate administrative roles and save a particularly high-salaried expense we had to target those areas that were going to sustain our reduction in expenses,” Murphy said.
The biggest cuts came from administrative positions, he added.
“We approached it trying to preserve and protect our frontline patient caregivers and targeted more administrative support staff positions. Roughly 75% of the cuts came from administration and support roles,” he said.
In the email last week, Murphy said that “the executive team, including myself, [is] taking a 10% salary reduction.”
Valley View considered several factors into consideration when deciding who to let go.
“[Longevity] certainly was a factor but [so were] performance, essential roles … and the opportunity to try to combine roles into a single individual [position]. … It was a bunch of factors and a bunch of targeted opportunities that we focused on,” he said.
The cuts are not a temporary measure.
“Our projections and understanding is that these are positions that won’t come back,” Murphy said.
Nevertheless, Valley View remains ready for any future waves of COVID-19, Murphy said.
“We are perfectly staffed and prepared to manage [COVID flare-ups]. … Our ability on the frontline to take care of our patients is fully intact,” Murphy said.
Those who have kept their jobs can expect to do more than before. “It’s going to be squeezing more into the same amount of time,” Murphy said of the reductions.
The layoffs can only go so far in offsetting 2020 losses that could approach $60 million, but future layoffs are neither planned nor expected.
“[The cuts] are probably in the neighborhood of about 20% [of that amount],” Murphy said.
Murphy doesn’t expect the public to see much difference when visiting Valley View.
“Our hours of operation, our expansive service lines, our care coordination, all the historical components of our health care delivery system will remain in place, and I don’t think they’ll notice any changes. This is more behind-the-scenes, administrative roles and not directly impacting how we care for patients in our community,” he said.
Murphy said he doesn’t expect the staff reduction to hinder the hospital’s ability to earn revenue.
“My hope is obviously [that it wouldn’t], that we’ll be able to provide the same level of clinical care and ensuing revenue that that care provides us. We’re really striving to do more with less and find opportunities to … be more efficient and yet still continue to provide all the services and care that we have historically provided,” he said.
Although he declined to get into specifics of severance packages, Murphy said, “We are going to make a very significant effort to continue helping our team members in their transitions to new opportunities,” he said.
Toward the beginning of the lockdown, Valley View made the decision to implement “COVID-19 supplemental pay at 100% of base salary” for all employees. “We were going to ensure that everybody knew that we were going to pay them for two months,” Murphy said.
The supplemental pay came from Valley View reserves, Murphy said, adding that he has no regrets about that expenditure in light of recent cuts.
While bringing a hospital district to voters at some point in the future might be a way of raising revenue, Valley View is not planning to go that route, Murphy said.
“We have no near-term plans to do so. … We know that there are examples toward Aspen and Grand River but obviously those situations don’t exist here for Valley View currently. We are doing everything we need to do to not rely on having to go outside of our own operations for support,” he said.
Murphy said he’s never seen anything like the COVID-19 pandemic.
“The word ‘unprecedented’ continues to be overutilized, but it so clearly distills what we’ve been going through. This is a scenario that I don’t think anyone that I’ve ever been involved with professionally has ever experienced. It’s put us in a position to challenge and try to be prepared for the unknown like nothing else I’ve ever been a part of,” Murphy said.
The recent cuts have been hard on everyone, Murphy said.
“It’s a very sad time for Valley View, honestly. It’s a very challenging time for our entire valley … and I really want people to know that these extremely difficult decisions were made to protect what in my opinion is our community’s most valuable asset, and it is really difficult,” Murphy said.
“We know we’re going to get through these hard times, and we’re going to continue to take care of our community and do it looking into the future in a manner that ensures that we provide the highest level of care locally to our community,” he said.