LAKEPORT, Calif. – Facing a continued drop in revenue and higher numbers of uninsured patients, Sutter Lakeside Hospital notified staff on Wednesday that staff cuts are beginning immediately.
Lake County News obtained a two-page “Turn-Around Progress Report” sent to all Sutter Lakeside Hospital staff, community advisory committee and foundation board members in which Chief Administrative Officer Siri Nelson announced the layoffs.
“Our net revenue has shrunk in the last four years from an average of $5.5 million a month in 2007 to an average of $4.8 million a month for the first 2 months of 2012. During this same time our operating expenses have continued to grow,” Nelson wrote.
“We have come to the tough, but unavoidable conclusion that the only way to achieve the significant cost savings necessary is through staff reductions,” she told staff.
In a Thursday interview with Lake County News, Nelson said Sutter Lakeside – which currently has 300 full-time employees – will see a 10-percent staff reduction across all areas of the hospital.
She said every individual at the hospital will feel the impact – from those losing their jobs to those who have to pick up extra responsibility due to the staff cuts.
Nelson said the hospital has taken numerous steps in recent years to reduce operating expenses, increase efficiencies and cut waste.
“We've done a lot of things to avoid having to do this,” Nelson said of the layoffs.
Some of the measures Nelson outlined in her report to staff included working to increase patient volumes and revenue, improving operational efficiencies, “aggressive flexing” of work schedules to respond to patient volumes, and a recently instituted wage freeze for managers and all exempt staff.
Nelson’s report said that if the hospital doesn’t take additional action it’s on track to lose more than $10 million this year.
Based on Sutter Lakeside’s Form 990 filings, which are submitted to the Internal Revenue Service, the hospital has been registering larger losses in recent years.
In 2009 – the most recent year available – the documents showed $70.3 million in income and $76.7 million in expense that year, for a total loss of $6.3 million.
That’s compared to $68.7 million in revenue and $72.5 million in expense in 2008, when the organization registered a loss of $3.7 million.
For 2007, the hospital had $66.5 million in revenue and $67.4 million in expense, for a loss of just over $939,000.
Last week, the nonprofit Sutter Health – of which Sutter Lakeside is a part – announced its financial performance for 2011, when total income was $634 million, compared to $878 million in 2010.
The system’s total 2011 operating revenues for 2011 were $9.1 billion, compared to $8.8 billion in 2010. Operating expenses in 2011 were $8.3 billion last year, compared to $8 billion the year before.
Sutter Lakeside last announced layoffs in January 2010, when 19 support and administrative positions were cut, as Lake County News has reported. Those cuts were attributed to dropping patient volumes.
A challenging economic climate
The biggest problem Sutter Lakeside Hospital is facing right now is Lake County's economic climate, Nelson said Thursday.
She explained that the hospital's financial challenges can be correlated to the recession in recent years and its impact on the county, including a shrinking commercial base and loss of jobs. There also are anticipated cuts from state and federal reimbursements.
“I don't know if this is the bottom,” she said.
Because of the tough economic times, Nelson said there has been a big shift in the hospital’s “payer mix.”
Specifically, there has been a big increase in the number of uninsured patients and those who can’t afford to pay for services, she explained.
Nelson said Sutter Lakeside Hospital is a nonprofit, and therefore it takes all patients regardless of ability to pay.
In past years, the hospital has offered an average of $7 million annually in health care services to the uninsured, Nelson said.
That number, Nelson added, jumped to $12 million in 2011, and it may be higher in 2012.
Nelson said the Wednesday report to staff, committee and board members was the first step in carrying out the workforce reductions.
The document stated that staff who will be laid off will be notified over the next few weeks, and that they will be assisted in a number of ways, including preferential hiring for openings that become available at Sutter Lakeside Hospital and other Sutter Health affiliates.
Because the hospital is subject to collective bargaining rules with the two unions with which its employees are members, it has a number of complex steps to go through to complete the layoff process, she said.
Not all of the details of how the process will proceed are available, Nelson said.
“The goal is to get everything done by April 20,” she said.
Nelson said she wanted to calm community fears – “We’re not closing,” she said – and emphasized that the hospital was cutting staff in order to continue to serve the community.
“Our goal is to provide care for Lake County long into the future,” she said.
Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it. .