MISHAWAKA | Franciscan Alliance announced today it is cutting 275 employees at its 11 hospitals and health care facilities in Indiana.
The reduction accounts for 1.4 percent of its workforce. The health care system employs about 20,000 workers, according to a statement.
The layoffs are being blamed on the "transformative shift in hospital economics."
Another 650 full-time equivalent positions will be eliminated by cutting back hours, closing open positions, through retirements and attrition, Franciscan announced.
"The remaining 19,000 employees will see cutbacks in benefits in 2014," according to a statement.
Benefit reductions include the elimination of the 1.5 percent employer match to the 403b retirement savings program, elimination of the PTO buy-back program, higher employee contributions for health care insurance, no salary increases for management and a new defined benefit/defined contribution pension for all co-workers not vested by Jan. 1 in the defined benefit pension plan, according to the statement.
"The cost savings from these, and other recent pay practice changes, will help preserve hundreds of other jobs, which otherwise would have to be eliminated," the system announced.
The Mishawaka-based company runs Franciscan St. Margaret Health hospitals in Dyer and Hammond, Franciscan St. Anthony Health hospitals in Crown Point and Michigan City and Franciscan Healthcare in Munster, among other facilities.
"The health care industry is changing rapidly, and economic pressures are forcing substantive changes in the field, including reduced reimbursements, new payer models, health care reform laws and shifts from inpatient to outpatient care," a Franciscan news release states.
“Franciscan Alliance has not been immune to such pressures and has found it necessary to align staffing levels to reflect lower patient volumes and reduced industry-wide reimbursements brought on by reforms associated with the Affordable Care Act,” stated Kevin Leahy, Franciscan Alliance president and chief executive officer.
To remain viable, Franciscan must cut its costs of care delivery by 15 to 20 percent during the next three years, the release states.
In September, Franciscan laid off 125 people at Franciscan St. James hospitals in Chicago Heights and Olympia Fields as well as several outpatient centers.
The company announced in June that it was looking for an organization to acquire or enter into a joint venture on its two Illinois hospitals. More than $300 million was invested in St. James Health hospitals in Chicago Heights and Olympia Fields since 1994, but the facilities still incurred significant operating losses, the company stated.