St. Charles’ mounting financial challenges lead to workforce reductions
Faced with skyrocketing contract labor, equipment and supply costs—and flat revenue—St. Charles Health System leadership has made the difficult decision to reduce its workforce. The reduction will impact 105 caregivers through layoffs. An additional 76 positions that are currently vacant have also been eliminated.
The 105 layoffs—which will take place over the next three days—are targeted to mostly non-clinical areas where the organization found through a benchmark data review process that it has more staff than other health systems of a similar size.
“For the past two years, our caregivers have taken on and conquered unprecedented challenges to care for our community, which is why it feels particularly unfair that we now find ourselves in this position,” said St. Charles President and CEO Joe Sluka. “While our financial situation isn’t unlike many other health systems around the country, this decision hurts. These are our people.”
Even after taking aggressive steps to address its current financial challenges, which have included both reducing expenses and identifying revenue improvement opportunities, the health system hemorrhaged $21.8 million through April. Year to date, St. Charles is facing a –6.7% operating loss.
The organization’s expenses and revenue began deteriorating in the spring of 2020, when its contract labor, equipment and supply costs began to soar at the same time it was forced to significantly reduce the number of surgeries it performed due to pandemic-related restrictions and the need to preserve bed capacity to care for critically ill COVID-19 patients. This imbalance persisted through 2021 as St. Charles experienced three significant surges of COVID-19 patients—at times operating up to 107% of its capacity—making it difficult to resume its pre-pandemic level of surgeries and other services. Further compounding St. Charles’ financial stress is the repayment of the more than $95 million in federal funds it received over the last two years to support its operations.
Though the workforce changes the health system is making this week are projected to reduce its expenses by approximately $20 million annually, St. Charles will still end 2022 with a substantial operating loss. With a sustained focus on improving the efficiency of its operations, the organization is working toward achieving a positive operating margin by the end of 2023 or early in 2024.
“It has taken two long years of the pandemic to get us into this situation,” Sluka said, “and it will take at least two years for us to get out of it. But we will. And we will continue to take excellent care of our community now and in the future.”
About St. Charles Health System
St. Charles Health System, Inc., headquartered in Bend, Ore., owns and operates St. Charles Bend, Madras, Prineville and Redmond. It also owns family care clinics in Bend, La Pine, Madras, Prineville, Redmond and Sisters. St. Charles is a private, not-for-profit Oregon corporation and is the largest employer in Central Oregon with more than 4,500 caregivers. In addition, there are more than 350 active medical staff members and nearly 200 visiting medical staff members who partner with the health system to provide a wide range of care and service to our communities.