HMC cutting 80 positions
The medical center laid off 89 employees just two months ago
Hawaii Medical Center LLC is cutting at least 80 employees, or nearly 10 percent of its workforce, to stem the bleeding at its two Oahu hospitals.
The owners of the former St. Francis Medical Centers, which has 890 workers, said the cuts will help bring staffing levels into balance with the number of patients at the hospitals.
The lay offs come just two months after HMC cut 89 employees after outsourcing back-office operations.
"We hate to lose these fine people, but it doesn't make fiscal sense to keep them on under the current circumstances," said Danelo Canete, chief executive officer. "This is a very difficult, but necessary step."
Although the hospitals have been successful in improving revenue and reducing the average patient length of stay, the medical centers still aren't admitting enough patients to justify the workforce, Canete said.
In April, a hospital executive told the Star-Bulletin that the state's only physician-owned, for-profit hospitals have yet to turn the corner to profitability after inheriting money-losing operations in the January 2007 acquisition of the former St. Francis facilities in Liliha and Ewa. At the time, the company's initial restructuring led to layoffs of nearly 150 employees out of a 1,250-member work force.
Boosting physician referrals at the financially troubled medical centers is key to the success of the company's business model. In June, HMC outsourced its business office, call center, health information and admissions to Perot Systems of Nashville, Tenn., which has increased weekly cash collections by at least 30 percent.
HMC is a partnership of CHA LLC, formerly known as Cardiovascular Hospitals of America, and 130 local physicians who make up Hawaii Physician Group LLC.
In April, the owners hired medical-finance specialist Salim Hasham to evaluate all options to reduce negative cash flow and become profitable within the next two years.
Among the ways HMC is working to rebuild its finances is rebalancing the type of referrals that come to the hospitals. For years, the majority of referrals have been patients with low-paying Medicare and Medicaid, that have added to hospitals' financial burden.
But increasing higher-paying private insurance referrals from specialists and primary-care physicians hasn't materialized as fast as the group expected.
The layoffs buy the hospitals time to reverse the referral trend and is based on a recommendation by hospital consultant, Focus Management Group of Tampa, Fla., which was brought in by HMC's lenders to turn around operations.