Community Health Network to cut jobs in restructuring

Community Health Network, which lost $161 million last year on operations and investments, plans to cut an unspecified number of jobs through a workforce restructuring.

The Indianapolis-based hospital system confirmed Wednesday that it is taking the “unfortunate and necessary step” of making job cuts. It did not say how many jobs would be lost, or how many of them would be in patient care.

Community Health, the third-largest hospital system in the region by number of beds, said it was taking the step in the face of shrinking reimbursements, the rising cost of labor and supplies, and a new state law signed by Gov. Eric Holcomb last week that is pressuring large hospitals to lower prices.

“As a result, we have made the difficult decision to restructure our workforce and make organizational changes that impact jobs,” spokeswoman Kris Kirschner wrote in an email to IBJ. “These organizational changes will take place over time and focus on reducing redundancies and improving efficiencies.”

Community Health employees received an email on Friday from CEO Bryan Mills informing them there would be a reduction in staffing, according to an anonymous posting on Reddit. The Indiana Department of Workforce Development had not posted a layoff notice from Community Health as of Wednesday evening.

Last month, Community Health said income from operations fell 76% last year, to $32.5 million, even as the number of admissions, emergency-room visits, physician visits and outpatient surgeries all increased.

Another big setback was a loss of $196.7 million on investments, largely due to a market downturn. When that was included, along with some other minor gains and losses, the network finished the year with a loss of $160.9 million.

The increase in employee costs was driven by an 8.2% increase in the average hourly pay rate, a 3.2% increase in full-time equivalents due to increase patient volumes, an 8.5% increase in overtime wages, a 98.9% increase in temporary staff wages, a 22.6% increase in staff orientation costs and increased salaries due to various premium pay adjustments, sign-on bonuses and other costs, the network said.

Community Health operates six hospitals in central Indiana with a total of 1,231 staffed beds. Only Ascension St. Vincent and Indiana University Health have more beds in central Indiana.

The Indiana Hospital Association said Wednesday that all hospitals and health systems are looking at some form of restructuring and new efficiency measures, given the strain of the pandemic. It said Indiana hospitals collectively had a negative 2% margin in 2022, and this year has been even more challenging, with some just barely hanging on right now.

“I expect more impacts to be felt this year, and am particularly concerned with reductions in [obstetrics] service availability,” hospital association Brian Tabor wrote in an email to IBJ. “The headwinds of extreme provider shortages, along with rising costs of labor and supplies, aren’t going away soon.”

Community Health did not say when the restructuring would be begin, but said changes were necessary to protect its financial future.

“This is not a decision we take lightly,” Kirschner said. “It is an unfortunate and necessary step to remain a trusted health care system fulfilling our mission of enhancing the health and well-being of the communities we serve.”