Orlando Health to cut record number of jobs to save money

The move is part of a broader effort to position the hospital system for the health-care overhaul, CEO Sherrie Sitarik said.

In the largest staff reduction in its nearly 100-year history, Orlando Health is cutting up to 400 jobs starting immediately, hospital system officials announced Monday.

The elimination of jobs will occur in two phases and represents a 2 percent to 3 percent reduction in the system's 16,000-person work force, said Orlando Health spokeswoman Kena Lewis. The cuts affect all departments and all eight of the system's hospitals, including Orlando Regional Medical Center and Arnold Palmer Hospital for Children, two of the system's better-known facilities.

Although no staff nursing positions have been eliminated, the hospital has cut nursing management positions. Those workers may apply for lower-level nursing jobs.

The first wave of employees affected received their notices Friday, Lewis said. The next wave of downsizing will occur after the first of the year.

The non-profit health network also will reduce staffing through attrition, she said.

Another part of the system's five-point cost restructuring includes eliminating "admirable but not sustainable" programs, Lewis said. The hospital also will work to standardize certain health-care procedures.

The hospital is cutting supply expenses by consolidating pharmaceutical purchases through one wholesaler and by renegotiating contracts for cardiac pacemakers and implantable defibrillators. Those two measures combined will result in an annual savings of $825,000, Lewis said.

The hospital will also delay capital spending, she said.

However, the hospital system will move forward with its $300 million expansion and renovation of Orlando Regional Medical Center, which is under way, and its $50 million acquisition of Physician Associates, a large, primary-care medical practice. That purchase is set to be complete Dec. 31.

Orlando Health officials called the cost-cutting moves necessary.

"Health-care reform mandates and changes in reimbursement structures for Medicare and Medicaid are forcing health-care organizations throughout the U.S. to confront new challenges," Sitarik said. "We must find better ways to deliver enhanced value to patients and lower the overall cost of care."

As hospitals make moves that improve care and reduce readmission rates from infections, their revenues drop, said Sitarik.

"We have made great strides in improving our quality outcomes. But these gains have also triggered lowered revenues due in part to a reduction in readmissions."

The cuts are necessary as the hospital transitions to a new payment model, one that pays based on value or outcome, not on volume, said Sitarik.

"Eventually that will even out," said Lewis, "but for a while it will present a fiscal challenge."

Such cost-cutting measures are happening across the country. On Wednesday, Wake Forest Baptist Medical Center in North Carolina announced that it would cut 950 jobs by June.