[Editor’s Note: This story has been updated with additional information from Lafayette General Health.]
Citing changes in reimbursement rates, increased patient debt, state and federal funding reductions and the overall economic downturn, Lafayette General Health announced Thursday that it will lay off 70 employees. The layoff represents 1.6 percent of the company’s workforce of nearly 4,000 employees.
“The majority of the cuts are at the system [administrative] level,” LGH President and CEO David Callecod tells ABiz in an emailed response to questions about the layoffs. “We did everything we could to protect our clinical services.” The hospital group says it has been “forced to right-size operations in the most efficient manner and make changes organization wide.”
The largest health care provider in the region, LGH is the parent company of Lafayette General Medical Center and also manages six major health care providers across 10 Acadiana parishes. Additionally, it’s affiliated with several more facilities throughout the region. While many layoffs are at the system level, affected facilities include LGMC, Lafayette General Southwest, University Hospital & Clinics and Acadia General Hospital.
The company also confirms that it is doing away with many contract nursing positions. “Our goal is to drastically reduce our use of contract nursing due to its high cost. For the most part, with each agency contract that expires, we hope to hire a full-time nurse to replace each contract nurse,” Callecod says, explaining that agency nurses can cost the system two to three times that of a full-time employee.
Lately the group has been paying high recruitment bonuses for some positions — it recently advertised a $5,000 sign-on bonus for surgical techs — a competitive strategy it plans to continue. “We are paying bonuses for critical need positions to include RN, surgical techs and inpatient coders,” the administrator says.
“Patient care will not be interrupted during the process,” the company stresses in a prepared statement regarding the layoffs, which come as Gov. John Bel Edwards’ administration and the state Department of Health and Hospitals seeks to renegotiate the terms of the public-private partnerships undertaken during the administration of Edwards’ predecessor, Bobby Jindal, in which LGH assumed management of Lafayette’s University Medical Center, now known as University Hospital and Clinics.
“It is multi-factorial, with many things leading to this decision, so it would be unfair to point to one,” Callecod says in response to a specific inquiry about the impact of the renegotiated state contract. “Reimbursement reductions at the state and federal level play a part, but so does the local economy in that people are unable to pay their high deductibles and co-pays. Health care is not immune to the downturn in our economy. Our accounts receivable is growing.”
Last year the hospital group purchased the Regional Medical Center of Acadiana campus, renaming it Lafayette General Southwest and moving its inpatient physician rehabilitation unit to LGSW. Callecod says LGH continues to explore additional clinical service offerings at that Ambassador Caffery Parkway site.
“We are consolidating other services and bringing those to Lafayette General Medical Center. This will lower our overall costs,” he says, noting that LGSW will remain a “fully operational hospital.”
Broader plans call for the company to add more ICU and medicine/surgery beds to LGMC. “Our goal is two additional ICU beds and 12 more med/surg beds to start, then increasing to a maximum of 36 med/surg beds if we are able to staff it with full-time employees rather than contract nurses,” Callecod says.
LGH’s closest competitor, Our Lady of Lourdes, has no plans for layoffs at its local facilities, spokeswoman Elisabeth Arnold tells ABiz.
LHG says it continues to work hard to lower costs in other areas to avoid more layoffs. “As all health care organizations do, we will continue to evaluate our operations as we move into a value-based payment system,” Callecod notes.