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Posted January 8, 2014 | comments Leave a comment

Valley Health cuts 33 jobs

By Katie Demeria

Thirty-three Valley Health employees lost their jobs Wednesday as part of the health system's response to national changes in health care, according to CEO Mark Merrill.

Merrill and his team became aware that cuts would be necessary in late 2012, he said.

"As we started looking at what was occurring with national health care trends and dampening of demand, we anticipated that we would have to modify our cost structure to be appropriately balanced with our revenue," Merrill said.

In addition to those 33 job cuts, four employees within the system experienced a reduction in hours and 25 vacant positions were eliminated.

Merrill said the cuts were made in response to various factors, including payment reductions included in the Affordable Care Act, federal budget cuts, payer constraints caused by insurance companies becoming more conservative with rate increases, and decreasing patient demand.

"During the course of 2013, we had to budget some increases and we started putting these positions on hold and realizing that the volume of clinical activity was not meeting demands," Merrill said. "So that's when we started eliminating."

The health system attempted to make cuts in other areas throughout 2013, Merrill added. Costs were reduced in supply areas, catering services, consulting and traveling. The last step, he continued, was looking at labor reduction by consolidating positions.

"When we rolled it all together, we recognized that in order to get where we needed to get, we had to reduce further," he said. "It was not an overnight decision. This has been something our team has been working on for quite a while."

Cuts in the federal government's budget, as well as Virginia's decision not to expand Medicaid, Merrill said, had significant impacts on Valley Health's revenues.

"The federal budget included a 2 percent cut, and that may sound small, but that was just over $5 million for us," he said.

In 2013, 17 Valley Health employees lost their jobs, eight experienced a reduction in hours and 100 vacant positions were eliminated, according a news release.

Twenty-five percent of those who recently lost their jobs with Valley Health were part of the management staff, Merrill said.

Support staff was also cut, including those who occupied educational or clerical support roles. Others included secretaries, pharmacy technicians and some clinical staff.

"Every area was affected by these cuts, including the corporate office," Merrill said. "We needed to come up with some additional savings, and I'm very proud of the way each team looked to see where we could make cuts in a collective effort across our system."

Sixty percent of the position cuts occurred at Winchester Medical Center, a fact Merrill attributed to the hospital's size. Every other hospital in the health system was also impacted, with at least one employee cut from each.

Shenandoah Memorial and Warren Memorial hospitals each had one employee cut from their staffs, Merrill said.

The decrease in patient demand Merrill cited as an additional reason for the health system's cuts is largely a response to a poor national economy, he added.

"People are not choosing to get elective procedures right now," he said. "If they need knee surgery or hip replacements, for example, they're putting them off until they can afford them."

Valley Health is not the only system forced into making cuts, Merrill said. Because it is reacting to national health care changes, many other hospitals and health systems throughout the country have been impacted as well.

"We're facing the same challenges that most systems across the United States are facing," he said. "But we're also doing a lot better than some areas in the country."

"We have a stable community and the economy here is more positive than it is in other areas -- the unemployment rate is dropping below the national average," he continued. "We are forecasted to have good population growth, and we feel that we have a solid medical community. We're optimistic about our future."

Contact staff writer Katie Demeria at 540-465-5137 ext. 155, or kdemeria@nvdaily.com


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