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UPDATED: Ballad Health cutting 150 occupied jobs, 49 others through attrition

Zach Vance • Updated Apr 17, 2018 at 9:00 PM

Ballad Health employees surely knew this day was coming, as Mountain States Health Alliance and Wellmont Health System executives began using the terms “synergies” and “duplicative services” shortly after the hospital merger was approved.

On Tuesday, standing in a near-empty boardroom, Ballad Health Executive Chairman Alan Levine delivered the news that his hospital system was laying off 150 employees and eliminating 49 positions through attrition.

Levine posited the decision as a necessary one, claiming the alternative — leaving Mountain States Health Alliance and Wellmont Health System alone — would have eventually cost as many as 1,000 jobs once a “for-profit” company intervened and snatched up one or both of the hospital systems.

“So yes, this is a horrible outcome for the people that are affected. We've done what we can do to try to minimize that, but we believe had we not merged, we'd be looking at closer to a thousand jobs that would be impacted. And we think the evidence supports that,” Levine said, although many of the employees who lost their jobs would likely argue that evidence is speculative.

As an example, Levine referenced the nonprofit hospital chain Mission Health in Asheville, North Carolina, which just last month signed a letter of intent with HCA Healthcare Inc., a Nashville-based, for-profit company that employs approximately 240,000 people. That deal appears to still be in the early stages, according to the Citizen-Times and the impact on jobs is still unknown.

“I'm not judging that, but the reality is small regional systems are disappearing,” Levine said. “They're being acquired by large national systems, and the two things that happen when that occurs is they eliminate a lot of local jobs and they attempt to raise prices, two things that we felt weren't good for this region.”

Ballad Health officials initially projected a loss of 250 jobs when the merger was still in its early stages, as Levine said that number was reduced due to the level of jobs absorbed through attrition.

No population growth, increasing drug and healthcare costs, cuts to Medicaid, declining inpatient utilization and deteriorating financials were among the reasons that led to the job cuts, Levine said.

Last year, Levine said Mountain States and Wellmont had about $25 million in combined operating income. This year, combined through December, Ballad Health is looking at a combined loss of $2.6 million.

“That’s a very big swing and it’s not inconsistent with what we’re seeing all over the country,” Levine said.

Levine said the decision on who to let go was mainly left to department heads, who “had the best visibility on where there was duplication of effort.” He even admitted he made some of the decisions to lay off some of the senior-level executives.

“There is nothing gratifying about making the decision that costs somebody their job,” Levine said. “The only thing I'm focused on right now is to make sure that we put the proper procedures in place to give them outplacement resources. We want to make sure we can assist them in any way we can.”

Altogether, Levine said the 150 jobs consist of a couple dozen management positions, nine senior executives, and numerous positions related to information technology.

“Again, most of these were administrative and support roles. We tried to keep it away from clinical roles, although that's not to say there aren't a few clinical folks affected,” Levine said.

Unrelated to the merger, Levine said 18 jobs were lost at Johnson City Medical Center due to the drastic decrease in inpatient healthcare. He said no other hospital was directly affected by staffing changes.

Not everyone who lost or is losing a job may know it just yet.

“We're in the process of reaching out to these individuals that are affected and we're trying to do it as quickly as we can. Their dignity and their well-being is something that we're obviously very concerned about,” the CEO and executive chairman said.

Levine would not disclose the amount Ballad Health saved from the job cuts, but he did note the hospital system has approximately 700 open positions, with nearly half nursing-related positions.

“We are not planning any additional reductions in force like this. Certainly, as we go forward, if we consolidate services, yeah, there will be effects on people's jobs there. But as we've said from the very beginning, when you eliminate duplication and you invest in a new service, you're creating new jobs,” Levine said, referencing the 70 jobs that will be created once the Princeton Transitional Care and Assisted Living Facility is completed.

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REPORTED EARLIER: 

Ballad Health will eliminate 150 occupied jobs in the wake of the merger of Wellmont Health System and Mountain States Health Alliance, officials announced Tuesday.

“Ballad Health firmly believes that achievement of these synergies is both necessary and also less disruptive than if Wellmont and Mountain States had each been sold to, or joined, larger systems based elsewhere,” Ballad said in a statement sent to news media. “Estimates are that if this had occurred, 1,000 or more jobs would have been lost from the region.”

The statement indicated that the positions are duplicative jobs that include senior-level executives as well as middle management and front-line employees.

“An additional 49 empty positions have already been eliminated through attrition and will not impact any individuals,” the statement read. “The total impact at this time is about 1 percent of our total workforce, and mostly affects administrative and support positions.”

Ballad noted that the total number of positions being eliminated is less than the 250 positions management estimated in September.

“While the Board of Directors and management believe it is important to continue reducing the cost of health care, it is also important to utilize a variety of approaches to achieving the synergies,” the statement read. “The objective of the board and management is to minimize the negative impact to our team members where possible, which is why it is necessary for us to use a combination of attrition and proactive reduction in positions.”

Ballad said it would do its best to help ease the transition for those who are being displaced. Severance pay and comprehensive outplacement services will be offered to affected team members, and the team members are eligible to apply for other open positions within Ballad Health if they choose.

“It is important to note that Ballad Health currently has more than 700 vacant positions and is seeking to hire people into those positions,” the statement read. “More than half of these positions are in nursing. The shift from duplicative administrative positions to the continued hiring of needed clinical positions is indicative of Ballad Health’s effort to reduce the overall cost of health care.”

Ballad CEO Alan Levine will meet with reporters today at 3:30 p.m. Keep visiting JohnsonCityPress.com for more on this developing story.

Full Ballad statement:

Last September, Ballad Health disclosed, consistent with its public filings during the application process for the approval of the merger by the states, that synergies resulting from the merger will include elimination of costly duplication in various positions. In September, the leaders of Ballad Health estimated an initial impact on approximately 250 positions. This estimate was reported publicly by the press, and such disclosure was consistent with our intent to be transparent.

Ballad Health firmly believes that achievement of these synergies is both necessary and also less disruptive than if Wellmont and Mountain States had each been sold to, or joined, larger systems based elsewhere. Estimates are that if this had occurred, 1,000 or more jobs would have been lost from the region.

Ballad Health is in the process of eliminating approximately 150 currently occupied positions. The positions affected by elimination of duplicative jobs include senior-level executives as well as middle management and front-line team members. An additional 49 empty positions have already been eliminated through attrition and will not impact any individuals. The total impact at this time is about 1% of our total workforce, and mostly affects administrative and support positions.

The total number of positions being eliminated is less than management estimated in September. While the board of directors and management believe it is important to continue reducing the cost of health care, it is also important to utilize a variety of approaches to achieving the synergies. The objective of the board and management is to minimize the negative impact to our team members where possible, which is why it is necessary for us to use a combination of attrition and proactive reduction in positions.

Our goal is to treat every team member with dignity and respect, and we will do our best to help ease the transition for those who are being displaced. Severance pay and comprehensive outplacement services will be offered to affected team members, and the team members are eligible to apply for other open positions within Ballad Health if they choose. It is important to note that Ballad Health currently has more than 700 vacant positions and is seeking to hire people into those positions. More than half of these positions are in nursing. The shift from duplicative administrative positions to the continued hiring of needed clinical positions is indicative of Ballad Health’s effort to reduce the overall cost of health care.

As Ballad Health has publicly disclosed, and consistent with public filings by Wellmont and Mountain States, our combined operating income fell from a $25.1 million operating gain in the first six months of fiscal 2017 to an operating loss of $2.6 million in the first six months of fiscal 2018. Ballad Health is experiencing the same external pressures that hospitals throughout the nation are facing. Specifically, we are seeing increased supply and drug costs, increased cost of labor due to shortages in certain positions, federal policy changes driving down reimbursement, and the continued shift from inpatient to outpatient services. Each of these issues had a profound effect on the financial performance of both Wellmont and Mountain States leading up to the merger, and they continue to affect us as Ballad Health.

The financial challenges faced by the hospital industry are leading many health systems to be acquired by other health systems. Recently, Mission Health in Asheville announced it is being acquired by a for-profit chain. Additionally, more than 137 different health systems have announced layoffs or closures in the last year. Examples of such stories can be found online:

• https://www.beckershospitalreview.com/hospital-management-administration/136-layoffs-so-far-in-2017.html

• https://www.beckershospitalreview.com/hospital-management-administration/17-healthcare-layoffs-in-january.html

• https://www.statnews.com/2017/04/30/hospitals-layoffs-national/

• https://revcycleintelligence.com/news/hospitals-target-labor-costs-layoffs-to-reduce-healthcare-costs

Clearly, Ballad Health is not alone. What does differentiate us, however, is that by eliminating duplicative positions, we will be able to maintain services in each community where we operate, and over time, utilize those savings to create new, needed services. As announced, planning is underway to create new access points for pediatric emergencies, recruit new physicians and create residential and community-based addiction treatment resources. Those plans remain in the works, and Ballad Health is enthusiastic about the potential effect those investments will have on the community.

There is no doubt that any time a decision is made that adversely affects our colleagues, our primary concern is for them and their families. Unlike in the case where large out-of-market health systems acquire smaller ones, and then impose synergies on the local market, when we make a decision that impacts our colleagues, we are affecting our neighbors and friends. So, these decisions are made soberly and with a full understanding of the impact both on the individuals themselves and on the health system.

We intend to work with each individual to help them as we can, and we remain committed to being forthright in the decisions we make, and communicating the reasons for them.

Ballad Health will eliminate 150 occupied jobs in the wake of the merger of Wellmont Health System and Mountain States Health Alliance, officials announced Tuesday.

“Ballad Health firmly believes that achievement of these synergies is both necessary and also less disruptive than if Wellmont and Mountain States had each been sold to, or joined, larger systems based elsewhere,” Ballad said in a statement sent to news media. “Estimates are that if this had occurred, 1,000 or more jobs would have been lost from the region.”

The statement indicated that the positions are duplicative jobs that include senior-level executives as well as middle management and front-line employees.

“An additional 49 empty positions have already been eliminated through attrition and will not impact any individuals,” the statement read. “The total impact at this time is about 1 percent of our total workforce, and mostly affects administrative and support positions.”

Ballad noted that the total number of positions being eliminated is less than the 250 positions management estimated in September.

“While the Board of Directors and management believe it is important to continue reducing the cost of health care, it is also important to utilize a variety of approaches to achieving the synergies,” the statement read. “The objective of the board and management is to minimize the negative impact to our team members where possible, which is why it is necessary for us to use a combination of attrition and proactive reduction in positions.”

Ballad said it would do its best to help ease the transition for those who are being displaced. Severance pay and comprehensive outplacement services will be offered to affected team members, and the team members are eligible to apply for other open positions within Ballad Health if they choose.

“It is important to note that Ballad Health currently has more than 700 vacant positions and is seeking to hire people into those positions,” the statement read. “More than half of these positions are in nursing. The shift from duplicative administrative positions to the continued hiring of needed clinical positions is indicative of Ballad Health’s effort to reduce the overall cost of health care.”

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