OHSU & Legacy: Hundreds of layoffs

By Oregon Tax News

Hundreds of health care related jobs in the Portland Metro area are being cut and more losses could be on the way if state reforms fail to produce savings promised by lawmakers.

In mid-December, KPTV reported that Legacy Health Systems plans to cut as many as 400 administrative jobs across its six hospitals and 36 clinics in Oregon and southwest Washington. A few days later, the Oregonian reported that layoffs and cuts in services to low-income families are being considered by Oregon Health & Science University (OHSU) because expected savings from state reforms are failing to materialize. In both cases, past cuts and the expectation of future reductions to state Medicaid programs have taken a toll.

Legacy, which employs 10,000 area workers, faces a $40 million budget shortfall entering the new year due in large part to a $30 million shortfall in Medicaid reimbursements. The group expects to finalize the layoffs, most of which will occur in Portland, by the middle of January and notify affected employees by February 15. Even with the savings from layoffs, Legacy says more cuts could be forthcoming given the current uncertainty surrounding government-funded health care programs. Rank and file Legacy employees are represented by Local 49 of the Service Employees International Union, which signaled its intention to review the justification for the job cuts.

Layoffs by OHSU are less certain but increasingly anticipated by the institution’s board. The state previously assumed that health care savings worth $240 million could be achieved through greater efficiency during the 2011-2013 budget cycle—a fact that led Governor Kitzhaber to initiate health care reforms to ensure the assumed savings and avoid cuts to core health care services. OHSU recently conducted two pilot projects to gauge the reforms’ success in reducing costs only to learn that they will likely achieve savings of less than 10 percent. The projections are all the more troubling given that $400 million in matching federal health care money could be lost due to the state budget assumption. Deep budget cuts to health care are, therefore, expected by OHSU President Joe Robertson, according to the Oregonian.

In recent years, federal and state budget cuts, the growing number of uninsured, and a lagging economy have all contributed to health care industry layoffs in Oregon. That trend could continue as state revenue projections fail to meet budget expectations. Overall, however, industry analysts say the hospital sector is strong and contributed to 20 percent of all new jobs nationwide over the past year. Hospitals across the country added 9,000 jobs in November. Moreover, economist project further industry growth as hospitals prepare for the expansion associated with the 2014 implementation of the Affordable Care Act.

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