“We assumed operation of a hospital that was already losing money, and on top of that, there were huge budget cuts from the federal and state government,” CEO Barry Keel said in an email. “When Bay Medical transitioned to Sacred Heart and LHP, it was largely because the hospital had been losing money for quite some time.
“There has been no choice but to reduce our expenses to be more efficient in everything we do,” he said.
A wave of layoffs started after Bay County Commissioners voted 4-1 to approve the 40-year-lease, giving joint venture partners LHP Hospital Group and Sacred Heart Health System shared control of the hospital. The joint-venture partners paid the hospital $154 million upfront; Bay Medical had $120 million debt.
County Commissioner Guy Tunnell said the declining financial situation at the hospital would have led to staff reduction had the hospital remained a public entity, and the commission followed directives of Bay Medical’s former Board of Trustees, which recommended the lease be signed.
A “gentlemen’s agreement” not to lay off employees was supposed to be in place for a year after the private companies took over, according to Tunnell. However, “it’s a hard business decision that the folks over at Sacred Heart had to make.”
The downsizing affected nonclinical areas, including administration, management, construction and support personnel. No bedside nursing staff was cut.
“Bottom line, it’s not our prerogative to second guess” the former Board of Trustees. “They know the hospital business,” Tunnell said. “Worst case scenario: We’d have to run that hospital, shut it down or require a tax in order to support the hospital.”
About 3 percent of the hospital’s staff, 58 employees, were cut November last year. Keel, who became CEO just six months before that layoff, said health-care reform had caused the hospital to “restructure.”
Most recently, effective last month, 30 employees were laid off due to the hospital outsourcing its billing department. Employees were told to apply for other Bay Medical openings and available positions at Navigant Healthcare Cymetrix, which took over billing services.
“These have been extremely difficult decisions, but we have a responsibility to our patients and our workforce to keep our doors open and continue serving this community,” Keel said.
Since 2012, Bay Medical has reinvested $10.2 million in tax revenues, $13 million in capital improvements and provided charity care that totals about $54.8 million, according to Keel. Along with reducing expenses, the hospital has increased revenues, improved patient satisfaction and operated within its budget.
“We are making the changes needed to keep (Bay Medical) viable not only today but for generations to come,” he said.
Bay Medical spokeswoman Christa Davis wasn’t clear on whether more staff cuts are to come.
“In this environment it would be inappropriate to make commitments regarding future operational decisions,” she wrote in an email. ”However the goal behind all our decisions will be to ensure that Bay Medical-Sacred Heart is a thriving facility, both operationally and financially, in order to provide the best possible care for our community.”