April 15, 2005
On April 11, 2005, YKHC announced that it is implementing a 12-month financial recovery plan that involves streamlining operations and a reduction in force (RIF) of 40 positions within the corportation.
"We realize the significant impact this has on the YKHC family, the communities in which these employees live, as well as the entire region," said Gene Peltola, YKHC's President and CEO. "This was not an easy decision to arrive at. We wish we did not have to do this, but the reality is that payroll represents 60 percent of our costs."
For the first several months of the fiscal year, YKHC has not been able to meet its budgeted revenue projections. Although YKHC's expenses are within budget for the year, the revenues are less than projected, and thus a mid-year correction was required.
YKHC's lack of revenues was due to a difference between gross billing and net revenues of Medicare, Medicaid, and private insurance billings. In addion, projections of enhanced dental and pharmacy collections for Fiscal Year 2005 have not materialized as expected.
The plan identifies areas where YKHC can further maximize its revenues, and also includes cost-cutting measures to reduce expenses by four to six percent over the next 12 months. These measures include decreasing overtime, decreasing contract labor, decreasing non-patient travel, vehicle use consolidation, food purchase consolidation, and numerous other cost-saving measures.
In addition, YKHC's senior leadership voluntarily took a five percent reduction in salary in attempt to avoid the need for RIFs. Unfortunately, even with these revenue enhancements and cost containment measures, a reduction in force (RIF) is still necessary. YKHC expects these measures to be in effect through May 31, 2006.
Employees affected by the RIF are being provided 30 days notice on Monday, April 11, 2005.
"It is our hope that these affected employees can be placed in existing YKHC positions, since these employees will have first priority for open positions at YKHC," Peltola said. "The YKHC Human Resources Department is also working with other employers in the region to help employees with job placement."
"YKHC remains committed to our mission, 'Working together to achieve excellent health.' We have worked hard to make sure that the impact on patient care is minimized," said Ray Alstrom, YKHC Board Chair. "The YKHC Board of Directors and Senior Leadership Team will continue to work closely together with the people of this region to realize these savings. YKHC has enjoyed many successes over the years, and our employees have been the key to that success. That's what makes this bump in the trail so painful. We appreciate the support we have received during this difficult time, and would especially appreciate your compassion toward those employees affected the most," adds Alstrom.