November 21, 2017
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A Scalpel, Not an Ax

Sister Mary Norberta, president and CEO of St. Joseph Healthcare, determined to make ends meet in these persistently hard times, has chosen belt-tightening instead of layoffs. This could be a model for other entities, both in the health care realm and outside of it, as they adjust to economic reality.

She plans to save a quarter-million dollars a month by ordering a 5 percent salary reduction for all executives and administrators. The cut will apply to her own salary, recently reported as $330,000 (most of it paid to her Catholic order, the Connecticut-based Felician Sisters, which takes care of her living expenses).

Other savings will affect the 800 employees of St. Joseph Hospital and the employees of other St. Joseph Healthcare affiliates. Those measures will start June 1 and extend though the rest of this year.

Employees will temporarily lose employer matching of retirement fund contributions, tuition reimbursement for classes that start after June 1, student loan repayment for new employees, and nurses’ incentive payments and bonuses for outside work. Physicians’ payments for continuing education will be reduced. So will overtime work for hourly employees.

Also, all full-time hourly employees will take one unpaid day off a month for the next three months, with pro-rated unpaid time off for part-time employees.

Sister Norberta acknowledges that these savings will be painful, but finds them preferable to a sizable layoff. She told the Bangor Daily News: “I am proud of our employees. They are really sticking together. I told them that tough times don’t last, but tough people do.”

The cost-saving measures at St Joseph follow a common pattern in Maine as employers and the state government strive to weather what remains of the great recession that has ravaged the country’s economy. Maine is saving $10 million by furloughing 7,000 state employees for 20 days spread over two years. But the state and many other employers have relied partly on layoffs to reduce their payrolls.

Maine’s chief of economic research, Glenn Mills, reports that the number of nonfarm wage and salary jobs in the state has risen by 3,900 since a low in December 2009 to a March total of 591,200. Maine’s health care jobs have hovered rather steadily for about a year at around 99,000.

As Sister Norberta points out, demands for health services are increasing as the baby boom generation ages and requires increased attention. Costly emergency room service keep mounting as the number of uninsured rises. And hospital revenues decline as people put off medical appointments and elective procedures to avoid out of pocket costs.

Managing a health care operation means dealing with constant change. The new health care reform law will help Maine and Maine’s health care providers, but many of the benefits will not take effect for several years. So the salary cuts and staff furlough days will be reviewed in July for extension if necessary.

It is a prudent approach to a difficult situation.

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