Erlanger Health System eliminated 11 non-clinical leadership positions on Friday, a decision hospital officials say was necessary to cut costs due to the financial hardship brought on by the coronavirus.

"We do not have perfect visibility into the future and recognize there is a lot of uncertainty surrounding the coming months and years," Erlanger said in an internal staff memo about the layoffs. "Because of these unpredictable times, we have an obligation to make difficult decisions to ensure Erlanger has a healthy and lasting future."

The hospital said the reorganization and staff cuts will not impact patient care departments and those being displaced are being given extended pay and benefits.

In the memo, Erlanger CEO Dr. Will Jackson said the health system attempts to plan for disruptions in the market, but "this year we faced an unprecedented pandemic which has had a devastating financial impact on hospitals nationwide, " especially for tertiary care hospitals like Erlanger that treat the most vulnerable and critically ill populations.

"As the sole regional provider of many critical healthcare services, including transplant, pediatric and trauma care, we have an obligation to our community to meet their needs not just today, but for the long term as well," Jackson said.

The move comes one day after the Erlanger Health System trustees approved a new two-year contract with Jackson during a public meeting Thursday evening. Jackson, who makes $625,000 base salary per year, did not get a raise or an opportunity for an individual performance incentive.

Health systems across the United States have laid off employees or implemented pay cuts to reduce costs in the wake of the global pandemic.

Although the federal government provided some COVID-19 relief funds to hospitals through the CARES Act, many hospitals say it hasn't been enough.

Payments to safety-net hospitals such as Erlanger were just announced this week. Even before the pandemic, these hospitals operated on thin margins due to treating higher volumes of indigent and Medicaid patients.

Erlanger officials estimated that the public hospital saw a $35 million reduction in net patient revenue for the month of April due to temporarily suspending elective procedures, decreases in admissions and other coronavirus-related expenses.

Friday's layoffs mark the third round of staff and pay cuts at Erlanger since Jackson took over as CEO nine months ago.

In March, Erlanger furloughed some administrative employees, cut leadership pay, reduced overtime, suspended vacation accruals and retirement contributions and suspended job recruitment for administrative positions after COVID-19 preparations resulted in a 30 to 40% drop in revenue.

In October, Erlanger laid off 30 members of administrative management after new financial reports revealed the hospital ended fiscal year 2019 with a $4.4 million loss and the first quarter of fiscal 2020 with a $4.5 million loss.

At the time, Jackson's main directives from the board were to address physician relations, reorganize the hospital's management structure and reorganize the governance structure of Erlanger Medical Group.

When former CEO Kevin Spiegel took the helm in 2013, Erlanger had fewer than 100 employees who were considered management. The health system employed about 280 managers when Jackson became CEO.

Erlanger is home to the region's only academic medical center, Level 1 trauma center and children's hospital. It's the 10th largest public health system in the country and employs more than 7,000 people.

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