Memorial hospital lays off 70 workers

Memorial Hospital is located at 2525 de Sales Avenue in Chattanooga.

Photo by Angela Lewis /Chattanooga Times Free Press.

Memorial Health Care System announced layoffs of about 70 people Thursday, the third area hospital to cut staff this year.

In a news release, Memorial President and CEO James Hobson cited the economic recession and hospital reform as reasons for the cuts. Changes in the hospital industry mean shifts to outpatient settings and other ways to deliver health care, he said, and more people also are delaying medical care or forgoing elective procedures.

"Those shifts in the care delivery call us to refine our staffing structure so resources are appropriately allocated for optimum service to our patients," Hobson said in the release. "Just as we adopt national quality benchmarks for the delivery of clinical care, we acknowledge that being a best-in-class hospital means we must continually evaluate how we deliver that care to ensure our workforce meets evolving patient needs."

On Thursday, Memorial Hospital spokeswoman Lisa McCluskey said the employee layoffs are not directly related to stalled negotiations over payment rates from BlueCross BlueShield of Tennessee. But she said low reimbursements from the insurer make it difficult to handle rising expenses at the hospital.

Under the federal Affordable Care Act, hospitals also will see a reduction in federal reimbursements but may also see an increase in patients because more people will have insurance coverage. However, investment services have offered a mixed assessment on whether the law will result in a net benefit to hospitals.

According to a recent Reuters report, Moody's Investors Service predicted a negative effect on hospitals while Fitch Ratings thought the law would likely benefit hospitals.

Thursday's cuts at Memorial were made after every area was examined for patient flows and efficiency of staffing, McCluskey wrote in an email. Employees were offered severance packages and will be helped with outplacement services.

Memorial cut about 25 to 30 employees in January 2009, the last time the hospital had layoffs, McCluskey said.

The nonprofit hospital, owned by Catholic Health Initiatives, has reported $190 million in profits over the last six years, nearly $43 million of that last year.

The hospital began a $318 million, four-year plan last year to expand and renovate its Glenwood and Hixson facilities, including expanded operating facilities and a seven-story cardiac bed tower.

Erlanger Health System and Erlanger at Hutcheson in North Georgia both have cut staff this year after losing millions of dollars at both hospitals.

Erlanger cut more than 150 people — about 3 percent of its 4,500 employees — in three rounds of reductions that included vice presidents, managers and staff. Hutcheson cut less than 5 percent of its 825 employees this spring.

For-profit Parkridge Health System officials said Thursday they have not made any cuts this year and are planning to add staff.