OLEAN, N.Y. — Upper Allegheny Health System laid off 18 employees Thursday, including some at Olean General Hospital and Bradford (Pa.) Regional Medical Center.
Seven positions at Olean General, five positions at Bradford Regional and six positions at the health care system’s other support departments were terminated as part of the reduction, which includes management and is effective immediately. Affected employees were notified Thursday.
Upper Allegheny, which formed in 2009 as the parent company of Olean General and Bradford Regional, also announced that an additional 40 open positions across its organization are now closed.
The layoffs, which account for about 1.5 percent of Upper Allegheny’s 1,400 employees, are due to the organization’s 2016 financial performance “not meeting expectations,” officials said.
“Every employee impacted by this workforce reduction is valued,” said Dennis McCarthy, Upper Allegheny vice president of marketing and communications, in a statement. “However, if we do not act now to rebalance and rectify our financial performance, we stand to be in serious trouble very quickly. We cannot operate our hospitals at a deficit.”
Inadequate hospital reimbursements rates by insurance companies, Medicare and Medicare, and “changing patterns of inpatient care” have contributed to both hospitals not meeting financial targets after what officials said were nine years at Olean General and five years at Bradford Regional of positive operating margins.
According to financial figures provided to the Times Herald earlier this year, Olean General’s annual revenue was $114.2 million and Bradford Regional’s was $63.9 million.
McCarthy said Upper Allegheny has an “obligation” to get in front of fiscal challenges and protect its ability to provide care, and that eliminating open positions and reducing expenses were not enough. Workforce accounts for 50 percent of Upper Allegheny’s expense base, he said.
“Ignoring the financial realities confronting us today would be irresponsible,” he said.
Officials announced in May a proposed affiliation agreement for Kaleida Health to become the parent company of Upper Allegheny, with Olean General and Bradford Regional remaining separate legal entities. Kaleida Health is the largest health care provider in Western New York, with a collective revenue of $1.3 billion and roughly 9,500 staff. The process was said to take anywhere from six to 10 months.
At that time, officials said the agreement proposed no immediate changes to staff.
In January of 2010, shortly after the formation of Upper Allegheny, 59 Bradford Regional employees were laid off to create what officials called “financial stability.” Timothy Finan, Upper Allegheny president and CEO, said at the time that the layoffs were not a result of the formation of Upper Allegheny, noting that Bradford Regional had lost approximately $17 million over the previous four years.
McCarthy maintained in his statement Thursday that Olean General and Bradford Regional have had operating surpluses the past few years and approximately $22 million of financial benefit due to the formation of Upper Allegheny.
“Absent the formation of UAHS, both hospitals would find themselves today in a much more difficult financial situation,” he said.
Staff terminated Thursday will be placed on priority recall and given preference for any current or future vacancies for which they are qualified, and no patient services are being eliminated or reduced as a result of the layoffs, officials said.
