Chattanooga: Erlanger makes cuts in face of recession

Chattanooga: Erlanger makes cuts in face of recession

January 8th, 2009 by Emily Bregel in Local Regional News

Reeling from losses compounded by the economic downturn, Erlanger hospital is cutting jobs and implementing a partial hiring freeze, the hospital president said.

"Cutting back on overhead, reducing expenses and tightening up is what everyone else in all other industries is having to do, and health care is not insulated from it," said Jim Brexler, Erlanger hospital president and chief executive officer. The hospital hopes to cut about $10 million, or 2 percent of overall expenditures, by the end of the fiscal year.

To that end, Erlanger will eliminate some positions not directly related to patient care, reassign some employees and stop all new hires except for critical positions, officials said.


Erlanger hospital lost more than $15.6 million in the fiscal year that ended in June of 2008, compared to a gain of $15.3 million for the 2006-07 fiscal year.

Article: Chattanooga: Erlanger cuts 200 jobs, plans raises for some

About half the cost reductions will come from renegotiating contracts with suppliers and vendors, and likely less than 2 percent of the 4,000-person work force - about 80 jobs - will be affected by the cuts, officials said.

Throughout the whole Erlanger hospital system, employees who are not in direct patient care positions are being asked to justify their roles in the hospital.

However, "Any employee who is affected by a change is going to be given an opportunity to find a job within the system," Mr. Brexler said.

In 2008, Erlanger eliminated 200 positions in the hospital and reassigned many employees to other positions. Only 33 workers ultimately lost their jobs, he said.


Squeezed by the economic recession, many patients are delaying elective surgeries and other procedures that can bring in money for a hospital. At the same time, layoffs are resulting in more uninsured patients and greater levels of bad debt for hospitals nationwide, Mr. Brexler said.

Across Tennessee, hospitals are trying to cope by laying off employees, instituting hiring freezes or even cutting services, said Craig Becker, president of the Tennessee Hospital Association.

An association survey released last week found that more than nine in 10 hospitals in Tennessee said they have reduced staff in the last 90 days or are considering doing so. About six in 10 have cut or are considering cutting health care services, the survey showed.

"In my 25 years in this business, this is the quickest that I've seen a downturn hit hospitals," Mr. Becker said.

Last month, Memorial Hospital instituted a hiring freeze, and officials have said they're considering delaying the start date of a $330 million expansion project. Memorial officials could not be reached Wednesday afternoon for comment.

In November, Parkridge Medical Center eliminated 17 management-level jobs in response to the economic recession. The hospital has not implemented a hiring freeze or made any more job cuts, but officials are looking at all new hires with a more critical eye, said President and CEO Darrell Moore.

More potentially bad news is on the horizon with impending cuts to TennCare, the state's managed Medicaid program, which are projected to reach at least $400 million in state funds. Cuts to enrollment in TennCare would worsen the situation for hospitals, which will have to absorb more losses from patients without insurance, hospital officials said.

"It's the uncertainty that makes this even more challenging," Mr. Brexler said.