NATCHEZ REGIONAL MEDICAL CENTER ANNOUNCES A REDUCTION IN FORCE Staff Reductions Are a Necessary Step in the Hospital’s Path to Financial Health On May 12th the Board of Trustees of Natchez Regional Medical Center unanimously approved an ambitious plan to restructure the Medical Center to insure its long-term role as a provider of quality health services to the citizens of the Miss-Lou Region and Adams County. The first step in the plan is to bring the hospital’s expenses in line with current revenues. Currently the Medical Center is spending, on average, $200,000 to $300,000 each month more than it is being paid for the healthcare services which it provides. Like any responsible organization, the hospital must reduce spending to below current income levels. The approved plan mandates that management reduce spending or increase revenues by an aggregate of $5 million per year to eliminate the current monthly cash deficit and restore the hospital to sustainable profit margins which are comparable to other community hospitals. Currently labor costs, including professional fees, account for over 70% of the hospital’s discretionary spending. Based on this factor and on productivity analyses that indicate that the hospital has significantly more full time equivalent staff than should be required for a high performing institution with comparable facilities and patient volumes, the Hospital will implement a Reduction in Force (RIF) to reduce annual net labor cost 2 by approximately $3 million over the next 90 days. Plans for the reduction in force include, in addition to staff reductions, additional steps to improve the equity and competitiveness of the Medical Center’s overall wage and salary structure, including: Elimination of all currently vacant positions. Termination over the next 90 days of approximately 85 to 90 FTE currently filled staff positions for total annual gross cost savings of approximately $4 million. Restoration effective June 1, 2008 on a prospective basis of the 5% across-the-board wage and salary reduction implemented on April 1, 2008 at an annualized cost increase of approximately $900,000. Implementation effective June 1, 2008, of a minimum wage at NRMC of $8.00 per hour for all entry level unskilled labor. Effective June 1, 2008, adjustments in middle management compensation as needed to be market competitive and compensate for additional responsibilities being assumed as part of the consolidation of certain departments and services. Changes in the employee health insurance program to reduce total cost for both the hospital and participating employees. Review of the overall wage and salary structure and making the necessary adjustments to insure that NRMC’s structure is competitive within the local market. Approximately 65 FTE filled staff positions will be eliminated on May 16 as part of the reduction in force. Over the next 60 to 90 days an additional 20 to 25 FTE filled staff positions will also be eliminated. In total approximately 100 full and part time jobs will be affected by the lay-off. Scott Phillips, CEO of Natchez Regional Medical Center, and an experienced hospital turnaround executive retained by the Board of Trustees to lead the restructuring of the hospital, stated, “The reduction in force includes senior and middle management, medical and clinical personnel and staff from virtually every department and function within the hospital.” In planning for the reduction, the hospital’s policy was followed, which states that lay-offs will be made on the basis of the hospital requirements to meet patient care needs and will be based on seniority within unit and job title. In accordance with the instruction of the Board of Trustees, the final list of employees whose positions were selected for elimination was reviewed by independent labor counsel appointed by the board, to ensure objectivity and compliance with all applicable laws and regulations. Should a vacancy occur in the department of an affected employee in the 180 days following the layoff of, under hospital policy the individual will have the right to be recalled and retain all seniority which they enjoyed at the time of the lay-off. These recalls will be based on seniority within job title. “The terminations are in no way a reflection of the affected individual employees’ job performance,” said Phillips. “Individual employee’s positions were selected for elimination solely on the basis of seniority within job title and unit. The hospital will gladly communicate this to any future employer that may inquire,” added Phillips. “On behalf of their colleagues and the community I would like to publicly thank the affected employees for their service at Natchez Regional Medical Center.” Peggy Ballard, Branch Director of the Natchez WIN Job Center has been working with Natchez Regional Medical Center to ensure the employees affected by the reduction know their options and the resources available to them through the Center. “We have already set up appointments for the employees, at which time they will be given information on programs and services, including job placement assistance, unemployment insurance, health insurance for children, job training and information on resume preparation,” said Ballard. Moving forward with the restructuring plan and goals for Natchez Regional, Mr. Phillips announced the reorganization of the hospital’s management structure. “The hospital’s previous organizational chart reflected far too many levels of management, and it was apparent to me that we needed to redesign the way we deliver healthcare,” added Phillips. “Patients are going to see a hospital where all employees work more efficiently and managers are organized and empowered to improve operations. The end results will be better service and a better hospital,” said Phillips. ###