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Mission Hospital Layoffs & Budget Cuts

The president and CEO of Mission Hospital says the hospital will have to cut 70 jobs, but other cost cutting measures will eliminate the need to lay off as many as 500 other positions. News 13 received the letter from Ronald Paulus around 5:30 p.m. Monday. He says executives will have significant salary cuts. Other employees will not get raises. Also, they are freezing paid time off and a change in retirement benefits.

Click here to view Mission Hospital's 990 forms.

Click here to view salary information.

The following is the press release from Ronald Paulus:

"Dear Board, Caregivers and Physicians:

In my last communication, I told you that I would keep everyone uptodate in a direct, transparent manner as we worked through our very difficult budget challenges for 2014. This letter is the next step in that ongoing process, but first, I would like to briefly reflect on our work together.

When I arrived at Mission in September 2010, I focused on just a few things: learning about our organization and community, responding to acute events, building the team and creating bridges to the future. In particular, I chose to invest heavily in patient safety and quality, rather than to focus on reducing waste. Over the past three years, we have dramatically improved our patients experiences and outcomes and I want to thank each of you for your superb work in ensuring that we achieve our BIG(GER) Aim at Mission.

As just two examples: 1) our patient experience ratings have improved from the 60th to the 90th percentiles nationally; and 2) Mission now has more than 500 fewer patient deaths per year than expected (when compared to 2010 performance).

As all of you know, we face numerous challenges: healthcare reform, federal sequestration, lack of Medicaid expansion and Medicaid cuts. Hospitals across our state and region have initiated layoffs of hundreds of their employees. To offset these changes, I chose a different path in 2013 by focusing intensively on process redesign; it is heartwarming to see the impact of those efforts (some of which I shared in my last communication). However, as good as our work has been, we simply arent where we need to be not yet. I believe that it will take another year to fully realize the benefits from our redesign efforts as we continue to improve quality and reduce waste. Therefore, we need a strategy to buy time to allow that work to not only continue, but accelerate.

In my last letter, I outlined the core principles that we would follow in responding to our challenges including: a communityfirst focus, positioning Mission for future success via our 4 Point Strategic Plan and to the greatest extent possible, retaining jobs, compensation and benefits for our caregivers. We have tried our best, but to have the time we need to thoughtfully reengineer our processes we do need to make some changes that will reduce our costs more rapidly than reengineering allows.

Below, I describe the most substantive changes that directly impact our

Changes Impacting Mission Leadership Only:
- First, Im cutting my own compensation by 26% for 2014. As I said in my last letter, leaders must go first, and as CEO, I must go first among our leaders.
- The 2014 compensation of other leaders will also be reduced as follows:
o SVPs = 20%; Presidents/VPs = 17%; Directors = 13%
o Also, we have eliminated three Vice President positions

Changes Impacting Many or All Caregivers:
- Our last merit increase was in February 2013, but there will be no merit increases for 2014 systemwide. Market adjustments will be considered based upon market conditions.
- There will be a systemwide PTO Accrual Freeze for a maximum of three months during 2014. What this means is that in February 2014, you will not earn PTO. Based upon our financial performance, a second or third monthly PTO Accrual Freeze may occur in 2014.
-  There will be two rather than four PTO sellback opportunities in 2014.
- Beginning in January of 2014, Missions 403b match for current participants will be reduced from 4%/6%/8% to 4%/5%/7% (based upon years of service). Although a modest reduction for some, our 403b matching program remains significantly better than market.
- Also beginning in January, 2014, newly hired caregivers only will receive a different 403b match: 50% of the first 6% of contributions (after one year of service), which is better aligned with the market.
- The maximum value of the November gift cards is reduced from $150 to $75. We will implement a new caregiver reward system in 2014 (see below) that will replace gift cards.
- Our wellness incentive is retained, but that incentive is reduced to $100/quarter.

Some Good News:
- Our health insurance premium for caregivers will increase a very modest 5% (for a nonsmoking caregiver who completes the HRA). In addition we have included for the first time ever a cap on an employees portion of outofnetwork expenses so that no caregiver who participates in our health plan suffers a catastrophic loss due to their health expenses.
- We are building upon our Great Place to Work and Practice journey with the introduction of a new caregiver reward and recognition program. The platform will make it fun and easy for anyone across the system to receive recognition for excellent work. When awarded points, there is an incredibly diverse range of gift choices (along with traditional gift cards).
- We will not retreat into a shell, but rather focus on executing our strategic plan. We will continue to hire new staff in those roles and programs that position us for future success.
- Finally, if we work together successfully so that our 2014 performance proves better than budgeted and we achieve certain financial targets that will be clearly specified, I will reinstate some or all of the PTO accrual that was frozen and potentially provide for merit increases or earn back of leaderships lost compensation. Although these measures eliminated the need for program closures and radically reduced job eliminations by more than 500 positions, there will be some caregivers (fewer than 70) who are nonetheless impacted by a job loss. When even one caregiver loses his or her job, it is devastating, so our hearts are with those caregivers and their families. For any job elimination, we will work hard to find an alternative role that is appropriate for the skills and experience of that individual. While that will not always be possible, I do expect that it will significantly reduce the final number
of staff impacted by an actual job loss.

Finally, we know well that the challenges in our industry and region will not disappear and that many of these onetime savings cannot and should not be repeated in 2015. What these decisions do accomplish is the original objective: to buy time so that our redesign efforts can fully bear fruit as we reengineer our future together. Im counting on your continued support as is our community to do just that.

Ronald A. Paulus, MD"


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