SEBRING - Highlands Regional Medical Center is blaming sequestration and the Affordable Care Act for cutting employee benefits.
In a May 31 letter, CEO Brian Hess informed 450 employees that vacation days would be cut, 401(k) matches would be reduced, and raises would not be considered until January 2014. The hospital has a $28 million annual payroll.
"I was deeply disappointed our nation's elected officials failed to achieve a budget agreement on this year's spending plan in Washington," Hess' letter began. "Instead, they chose to do nothing, with the result being the imposition of what is now know as the sequestration."
In an email interview Wednesday, Hess said through spokeswoman Julie Fells that the cuts are also a result of the Florida Legislature "not accepting the federal aid from the Affordable Care Act."
When the automatic budget-cutting mechanism went into effect on April 1, U.S. health care providers lost more than $11 billion Medicare dollars.
"Absent Congressional action, which we hope will come before the next fiscal year that begins Oct. 1, the sequestration will continue through 2022, with Medicare cuts growing to $16 billion a year," Hess' letter continued.
The Affordable Care Act was implemented at the same time, Hess wrote, which is intended to reduce Medicare spending by $716 billion over 10 years.
"Hospitals across the nation are being forced to adjust their cost structures," Hess wrote. The hospital - owned by Highlands County but leased by HRMC - is one of 70 operated Health Management Associates of Naples. It provides $9.9 million in uncompensated care annually.
Fells said the benefits cuts are part of "an HMA-wide initiative in an effort to avoid layoffs."
Three Highlands County hospitals will lose hundreds of thousands of dollars from Medicaid because the Florida Legislature rejected billions in Obamacare money. Fells said 82 percent of HRMC's dollars come from Medicare and Medicaid. The other 18 percent are from private payors - cash customers and insurance companies.
"All Florida caregivers are losing $6.9 billion over the next 10 years due to the state not accepting the Medicaid portion of Affordable Care Act," Fells said, without specifying how much HRMC will lose individually.
She did not characterize HRMC's benefit cuts as cash-flow problems. "We're taking a proactive approach so that any issues can be avoided later on," Fells said. "It's important to realize that the sequestration on the federal end and not accepting federal aid for the Affordable Care Act on the state end will affect all healthcare providers. This isn't just hospitals, but all organizations that accept Medicare and Medicaid."
Fells did not directly answer a question about whether employees have resigned over the cuts. "The general opinion that we've heard is that employees are glad that it isn't layoffs."
Like others, Florida Hospital Heartland is feeling economic and Medicare-Medicaid pressures, but it has not cut employee benefits or patient care, spokeswoman Cathy Albritton said. "We are a not-for-profit; they are a for-profit," Albritton said. "We don't have shareholders to pay dividends to." In fact, she said Florida Hospital Heartland is constructing a new heart cath lab and installing a new CT scanner.
In response to rumors, Fells said last week HRMA is not being sold.
On Wednesday, the Wall Street Journal reported that Glenview Capital Management, HMA's largest shareholder, took a more active role this week by pushing for more relaxed investor limits. GCM is evaluating a range of measures including potentially changing all or part of HMA's board. The hedge fund wants HMA to eliminate a rule on shareholders acquiring more than 15 percent of the company "or, at a minimum, amend the poison pill" to a 25 percent threshold.
The Tuesday filing sent HMA's Class A shares up 8.8 percent to $15.15 in recent trading. The intraday high of $15.52 was its highest level since early 2007.