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Trios Health announces layoffs amid financial struggle

KENNEWICK, Wash. – Trios Health officials held a conference Friday to announce job cuts and the reduction of employee hours at their facility. The decision is marked by the hospital’s struggling financial position.

The Interim CEO and Chief Restructuring Officer Craig Cudworth said that Trios Health's financial issues have persisted over several years.

Trios Health produced net losses each year of the three years ending 2015 of ($2.6M), ($9.1), and ($0.4M) respectively. Reports say Trios Health’s projected 2016 net losses are estimated to be nearly $12 million.

The report says poor performance led to the critical cash shortage.

At the press conference Friday, Cudworth said the hospital will not be filing for bankruptcy.

"We do not want to and we do not plan to, however, we could be forced into it in certain circumstances,” he said.

For example, Cudworth explained if creditors took legal action against the hospital it could force them into bankruptcy.

“In which case we have to know how we'd do it, when we do it, what we do, what would be involved and so forth," he said. “If we were forced to do that it would not stop the provisions of services to patients, the hospital would continue.”

The Trios board decided to bring on the consulting firm Quorum Health Resources starting Feb. 1 of this year to complete a financial, operational and strategic assessment and plan.

The consulting firm made recommendations, including reducing jobs and employee hours. Trios officials said they will lay off 25 employees and dozens of other employees will see a reduction in hours. All work force changes are effective April 1.

Cudworth said employees were notified on March 13.

"One of the worst things about it is the uncertainty for the entire workforce when you do it, yet it is something that is necessary,” Cudworth said.

"The first thing you have to look at is what are the standards that you're going to use, and the second thing that you have to make absolutely sure of is that no patients will be harmed by the reduction and no essential services will be terminated by the reduction."

Quorum’s final report recommended a reduction of up to 115 full-time equivalents or FTEs (not employees). One FTE equals 2,080 hours worked in a calendar year. Therefore, these numbers do not directly translate into the number of employees impacted.

Trios Health will realize 95 FTE reductions within its hospital and Trios Medical Group since the beginning of 2017. The reductions were realized thorugh attrition (not rehiring positions when possible), changes to shift scheduling and hours worked, voluntary layoffs, and involuntary layoffs.

Cudworth said the cut will save $4.3 million annually; $2.2 million of that will be realized from the April one changes alone.

Cudworth stressed that the reductions will not adversely affect their quality of care.

Cuts at the hospital include: ambulatory care unit, preoperative services, central sterile, clinical engineering, foundation health information management, laboratory, materials management, nutrition services, patient access, patient financial services, pharmacy, therapy services, and volunteers.

Cuts within the medical group include: administration, medical staff services, oncology, pediatrics, physician recruitment, primary care, sleep center, urgent care, and women's health.

Reports suggest there’s no single reason for the financial distress, but factors range from aggressive competition to the district’s debt load.

“With a debt-to-capitalization ratio of about 87 percent, the system is beyond what would typically be considered ‘fully leveraged.’ The magnitude of debt has crippled cash availability,” the report says.

The debt-to-capital ratio is a measurement of a company's financial leverage. The debt-to-capital ratio is calculated by taking the company's debt, including both short- and long-term liabilities and dividing it by the total capital. Total capital is all debt plus shareholders' equity, which may include items such as common stock, preferred stock and minority interest.

Reports say significant investment was made in physician practices. However, analyses suggest there is significant capacity to accommodate growth within those practices.

Analyses also suggest there are great number of full-time employees deployed than other similar high- performing organizations would deploy given present patient activity, reports say.

The report offers organizational recommendations, including:

• Pursuing bankruptcy protection

• Refinancing existing debt facilities

• Establish accountability to workforce productivity/organizational performance

• Provider access without sacrificing quality

• Consider merits of a Chief Medical Officer role for the system

• Consider affiliating with another provider system

• Focus development resources in primary care recruitment

• Consider tactics to attract commercially insured patients

• Focus on ED-to-admission flow, observation management and reduction of avoidable care days

Trios Health is the name of the Kennewick Public Hospital District’s system of care. It includes two hospitals and a network of care centers and services, with about 1,100 employees.

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