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KentuckyOne announces Flaget layoffs

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By FORREST BERKSHIRE, Landmark News Service'

KentuckyOne Health, the parent organization of Flaget Memorial Hospital in Bardstown, announced this week it will lay off employees, but didn’t release many details.
“The process is under way, and we will be reaching out to those employees affected first through the end of the month,” KentuckyOne Health spokeswoman Barbara Mackovic said in an email Tuesday.
“Decisions about staff reductions are among the most difficult decisions we make,” Mackovic said. “We are working to support the individuals impacted and to provide them with the resources they need during their transition, including severance based on length of service and other individual factors.”
The layoffs were not completely unexpected.
Ruth Brinkley, president and CEO of KentuckyOne, warned of possible layoffs in a video posted Feb. 7 on the organization’s employee news website and during a meeting with the Lexington Herald-Leader’s editorial board in late January.
“We must adjust our expenses immediately to more closely match the dollars we’re getting to take care of our patients,” Brinkley said in the video.
She cited a “fundamental shift” in how health-care providers are reimbursed as part of the Patient Protection and Affordable Care Act signed into law by President Barack Obama in 2010.
“We are now paid based on the quality and efficiency of the care we provide, and not just what or how much care we provide,” Brinkley said.
“We will do our very best to reduce expenses that do not involve reductions in the work force or reductions in the number of employees,” Brinkley said. “However, I do believe that, unfortunately, there will be reductions, because we must adjust what we are spending to the amount of money we get for taking care of our patients.”
Brinkley also said some services at its facilities will be dropped.
Brinkley said Kentucky-One had to make up for a $218 million shortfall by the beginning of its 2015 fiscal year, which begins in about 17 months.
“Our challenges are substantial,” she said.
The company operates about 200 locations in Kentucky and Indiana that include clinics, primary care centers, home health agencies and hospitals in Louisville, Lexington and smaller communities. It employs nearly 15,000 workers. According to the Nelson County Economic Development Agency, Flaget Memorial Hospital employs about 500 workers in Nelson County.
KentuckyOne manages Flaget Memorial Hospital, which was a part of the Saint Joseph Health System until 2008 when KentuckyOne Health was formed. The Bardstown hospital has 40 acute- and 12 skilled-nursing beds and treats patients from Marion, Washington, Spencer, Bullitt and LaRue counties, according to its website.
KentuckyOne Health was formed in early 2012 when Jewish Hospital, Saint Mary’s HealthCare and Saint Joseph Health System combined.
KentuckyOne’s majority owner is Catholic Health Initiatives.
An October financial analysis of CHI by the New York-based rating agency Standard & Poor listed several troubling findings, including a $400 million income decline in fiscal year 2013, resulting in a $274 million loss. The year prior, CHI had made $155 million in profits. The analysis reported that KentuckyOne experienced the largest loss out of CHI’s 12 regions.
As a result, S&P downgraded CHI’s bond rating. According to Insider Louisville, much of S&P’s concerns centered around increased debt due to bad investments in IT and in keeping up with changes in health care due to the Affordable Care Act and billions invested in mergers and acquisitions, some of which are not doing well.