TERRE HAUTE — Union Health System will cut 150 positions system-wide by the end of the year.
The system includes UAP Clinic, Union Hospital in Terre Haute and Union Hospital Clinton in Vermillion County.
“By 2020, as a system, we need to realize an estimated $200 million reduction to align ourselves and remain a strong organization,” Pat Board, CEO of Union Health System, stated in a Thursday letter to the health system employees.
The cut represents a 5-percent reduction of the system’s 3,000 workers.
Health system administrators declined immediate comment beyond Board’s letter to employees, but they are planning to release details on cost-cutting measures next week.
“We face numerous challenges due to changes in the healthcare environment and its impact on Union Health System, which include a shift to more outpatient services and declining reimbursement. Initiatives like our Accountable Care Organization, population health management, online patient portals, along with same-day and after-hours access to care, are all positively impacting the health of our community,” Board stated.
“Health systems throughout Indiana and across the nation have been forced to reduce costs to address the rapidly changing healthcare environment. Union Health System is not immune to these economic pressures,” he stated in the letter.
The announcement informed employees of the number of jobs being affected. However, no specific employees have yet lost their position and no specific notices have been given to any employee, said Kristi Whitacre, spokeswoman for UAP Clinic.
Robert Guell, professor of economics at Indiana State University, said the move by the Union Hospital Health System is a “natural reaction to a slowing of an unsustainable growth” in the health care industry.
“You see narrower networks and lower reimbursement rates and tougher negotiations on network pricing on particular forms of network care,” Guell said.
Some policies of the Patient Protection and Affordable Care Act, he said, “have impacted reimbursement rates to both hospitals and doctors offices, both in terms of what is going to be reimbursed and what the standard of care kinds of things are. And as a result, hospitals and doctor offices are having to look for cuts that they can make, not unlike any business when it finds itself in tighter economic times.
“This is a natural and not unforeseen consequence of businesses getting tighter control over their health insurance dollar and consequences of the Patient Protection and Affordable Care Act,” Guell said.
Health care costs nationwide, Guell said, “were accelerating so fast to businesses and to state governments for Medicaid and to the federal government for Medicare, that it became increasingly imperative for all of them to take a harder look at what they were paying for those services.”
Board indicated in his letter that Union Systems has had conversations “in leadership, department meetings and rounding” to focus on ways to reduce the cost of care and improve efficiencies.
“It is with great regret that we must reduce approximately 150 positions across the system before the end of the year. We are very much a family, and our associates are incredibly valuable to our organization. This difficult decision was not reached easily and comes only after careful consideration and thorough analysis,” Board stated.
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