Highmark’s Allegheny Health Network is laying off 262 workers and eliminating 200 open positions at its West Penn Allegheny hospitals as it seeks to match staffing levels to lower patient volume, the hospital system said Friday.
It is the second cost-cutting move this week as Allegheny Health Network focuses on repairing the financial health of West Penn Allegheny, which Highmark acquired in April and forms the backbone of the network that is preparing to compete with UPMC.
“Although extremely difficult, today’s workforce reduction is an essential step in our efforts to right-size the organization for the patient volume we currently have, and to strongly position it for future growth and success as a leading healthcare provider in the region,” spokesman Dan Laurent said.
The system doesn’t anticipate further layoffs, Laurent said.
The Service Employees International Union, which represents about 2,000 workers at West Penn Allegheny hospitals, said it was disappointed by the layoffs.
“Because SEIU Healthcare Pennsylvania employees are part of a union, they have contractual rights and a voice in this process,” spokeswoman Amelia Abromaitis said. “We fully expect the health system to work with us to minimize the adverse impact on the Allegheny Health Network workforce.”
Linda Thrower, a registered nurse at Allegheny Valley Hospital, was not at the hospital when layoffs were announced and hadn’t learned her fate.
“If they lay me off, they lay me off,” said the New Kensington woman who’s worked at the hospital for 33 years. “There’s not much really I can do about that.”
The Tribune-Review this week reported that Allegheny Health Network on Monday laid off the CEO of Allegheny Valley Hospital, Ned Laubacher, after four years at the Natrona Heights hospital’s helm, in what Laurent called an effort to streamline operations. Additionally, two executives from Forbes Regional Hospital in Monroeville were let go.
Separately, Daniel Lebish, chief financial officer of Allegheny Health Network and a key executive involved in guiding health insurer Highmark’s move into the hospital business, resigned to take a position at Columbus, Ga.-based insurer Aflac Inc., Laurent said.
Lebish couldn’t be reached. Laura Kane, an Aflac spokeswoman, could only confirm that Lebish had been hired but hadn’t started work yet. She declined to say what his position will be.
The latest layoffs are spread across West Penn Allegheny’s five hospitals, Allegheny General, Allegheny Valley, Canonsburg General, Forbes Regional and West Penn, and its corporate ranks.
Laurent declined to give a hospital-by-hospital breakdown. He said the layoffs “span every level of the workforce, but relatively few are related to direct patient care.”
Following the layoffs, West Penn Allegheny will have 10,300 workers. Allegheny Health Network, which also includes Jefferson Regional Medical Center in Jefferson Hills and St. Vincent Health System in Erie, employs nearly 17,000 people.
The cuts don’t affect Jefferson Regional and St. Vincent.
West Penn Allegheny’s financial losses have been growing as patient volumes decline and expenses increase. In the January-March quarter, the system’s operating loss grew to $37.7 million, up from $23.9 million the year before. During the quarter, revenue dropped by $10 million, and expenses jumped by $2.4 million.
West Penn Allegheny hospitals recorded 40,483 discharges in the nine months ended March 31, a 4 percent decline from 42,075 discharges in the same period last year. Officials have said the decline could be partly blamed on the opening of UPMC East in Monroeville last year, which took patients from Forbes Regional.
Laurent said progress is being made in several areas to improve the system’s financial performance, including reducing of non-personnel expenses, improving management of billing and collections, and making operations more efficient.
“Today’s action is just one component of a comprehensive strategy to strengthen the network’s financial position,” he said.