St. Joseph Gives Layoff Notices to 130 Workers

Layoff notices were handed Tuesday to 130 employees at St. Joseph Hospital of Orange, one of several steps being taken by the 440-bed hospital to trim about $19.3 million from operating expenses for the coming fiscal year, hospital officials said.

The layoffs are part of an operational reorganization aimed at keeping the facility in the black without compromising medical service, hospital president Larry Ainsworth said. The layoffs would reduce the 3,000-employee work force by 4.3%.

St. Joseph Health System, owner of St. Joseph Hospital, announced layoffs of 121 employees at St. Jude Medical Center in Fullerton in November and is reviewing the budget at its third Orange County Hospital, Mission Hospital Regional Medical Center in Mission Viejo.

The cuts at St. Joseph “are not coming out of the quality of patient care,” Ainsworth said Tuesday. “We feel good that we haven’t had to trim the nursing department,” where six positions were added.

About 20 of those to be laid off are clinical workers, among them physical therapists, cardiology technicians and mental health workers, including employees who provide music therapy or lead counseling discussion groups.

The vast majority of the job reductions come from cuts in clerical, management or service positions, hospital officials said. Most employees laid off will leave within two weeks, although some will depart during the next several months. In addition, 20 management positions were eliminated.

Other money-saving steps include consolidating some food service, housekeeping and maintenance work and contracting for other services. The hospital cafeteria service, for example, will be put to bid. Patient meals, however, will continue to be made in-house.

Ainsworth cited three major external factors dictating the need for savings: a reduction of $2 million a year in federal Medicare reimbursements due to federal cost-cutting, declining payments by some health plans and $155 million in earthquake retrofitting mandated under state law that must take place by 2008.

The hospital will end the fiscal year in the black with a $7.5-million surplus on revenues of $300 million, but future budgets were threatened by growing expenses. Inflation contributes about $2.2 million a year to increased costs, with $3 million more coming from salary and merit increases. And debt service for earthquake repairs will be nearly $11 million annually.

Hospital experts said St. Joseph is actually doing better than many other area facilities.

“In Southern California, 60% of hospitals are operating in the red,” said James Lott, executive director of the Healthcare Assn. of Southern California, a trade group. “Most hospitals make up the loss through other product lines and through philanthropy and foundations. But that can only work for so long.”

The laid-off workers will receive severance pay ranging from two to 26 weeks based on longevity, with a week of pay for each year of service. Job placement counseling also will be offered.

Executives are contributing to the belt-tightening and cost-cutting, Ainsworth said. Salaries for him and 10 members of the executive team have been frozen through June 30, 2001.

The restructuring, including cuts and ways to save money through efficiencies, were studied department by department for at least six months, with about $23 million in savings identified and implemented, officials said.