A senior executive with Indiana University Health says the decision to eliminate 800 jobs is part of a five-year plan to reduce expenses by more than $1 billion. The health care provider announced the measure this morning. Methodist and University Hospitals at IU Health President James Terwilliger says the job of each worker will change as a result of the move. Indiana University School of Medicine Dean Jay Hess will be a guest on this weekend's Inside INdiana Business Television. IU Health says it will offer an early retirement option to employees who are at least 62 years old. The system says the affected employees' last day on the job will be December 1.

Health systems throughout Indiana and the nation have been planning adjustments as they react to the implementation of the Affordable Care Act.

Employees were notified this morning. Our partners at WTHR in Indianapolis have obtained a copy of that email announcement:

IU Health President and CEO Dan Evans sent this email to employees:

“IU Health Team Members:

In my State of the System report to you last January, I outlined our goal of improving productivity by 25 percent – or roughly one billion dollars – over the next five years. We adopted this goal because we fully expect that the future reimbursement environment, from all payers, will look much like Medicare does today. In addition, we believe that managing the health of populations – helping to keep Hoosiers healthy rather than caring for them only when they are ill – is how we will increasingly be reimbursed by public and private payers in the future. To manage “population health” well, we will need to significantly invest in new technologies and processes – and we will need to do so in the face of worsening reimbursements.

Since January, we have made some progress. We have launched our Lean continuous improvement efforts, which are helping us to identify waste and improve productivity. And we have pursued other cost savings initiatives as well, such as centralizing our lab operations and consolidating other programs. We've also reduced some labor costs with flexible scheduling and by not filling open positions.

While all of these efforts are appreciated, they unfortunately have not been sufficient in achieving our targeted cost savings. This, along with declining reimbursement rates and inpatient volumes, has us significantly behind our budgeted operating performance. So much so that many hospitals and divisions across our system now must take more aggressive cost reduction measures, including workforce reductions. They include the academic health center, IU Health Ball Memorial Hospital, the North Central Region (IU Health North, Saxony and Tipton hospitals) and System Services.

Our team members – our colleagues and friends – are the most important asset to our organization's mission, and I assure you that the decision to reduce our workforce was reached only after much discussion and thoughtful analysis. While regrettable, these reductions are necessary if we are to offer affordable and preeminent care to the patients and families we have the honor to serve.

We are profoundly aware of the impact our decisions will have on the lives of our team members and their families. Consistent with our values of mutual trust and respect, we will make every effort to support all IU Health team members through this difficult transition.

Team members whose jobs are impacted by this workforce reduction will be notified in early October and will be provided with severance and outplacement assistance.

To minimize the number of team members affected by this workforce reduction, IU Health, for the first time, is offering an early retirement option to qualified team members who are at least 62 years old and will not turn 65 by Dec. 31, 2013, working in certain positions at the entities undergoing workforce reductions. Detailed information about this option, including the application deadline and eligibility criteria, will be provided this week to eligible team members.

We do not have a final, precise number of the reductions. At this time we estimate approximately 800 people will be impacted, but many will take advantage of our early retirement program, retraining opportunities and transfers, therefore reducing the number of reductions needed.

These are challenging times. While we cannot control the external environment, we can control our response to it. Now more than ever, it is important that we remain focused on our Lean efforts, which are helping us adapt to this changing environment and more consistently deliver on our promise to patients. We also will continue to aggressively pursue our move to managing population health. We must maintain our focus on these crucial initiatives.

IU Health is a world-class organization with a long history of providing high-quality care. Our targets for achieving preeminent patient care, quality and service have not – and will not – change. I am confident that the difficult decisions we are making now will position us to continue to provide access to preeminent, nationally recognized care well into the future.

I know you have many questions and concerns. Your leaders are here to help guide you through these challenges. I will keep you updated in the weeks ahead; and, as always, I thank you for your commitment and hard work on behalf of the patients and families we serve.”Source: WTHR, Indiana University Health Inside INdiana Business

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