(Editor’s note: This story was written by Taylor Reed of The Caledonian-Record, which first published it July 10, 2013.)
The 530 employees at Northeastern Vermont Regional Hospital in St. Johnsbury can stop bracing for the federal sequester.
Layoffs are not planned, hospital CEO Paul Bengtson said Tuesday. Cuts will occur elsewhere to cope with a sequester driven reduction of $400,000 yearly in Medicare reimbursement that struck April 1, he said.
“It’s significant,” Bengtson said. “We have to react to that by managing our expenses. We just need to make sure we are able to adapt to these things by not over-hiring and not under-hiring. We’re always struggling to manage our expenses here, just like any other business. We try to be fast, flexible and fat free so we can respond to these arbitrary cuts from the federal government. … There are better ways of managing our federal budget than having a sequester.”
The hospital avoided layoffs through careful planning, Bengtson said. That means putting off capital expenses and planned projects to cover the $400,000 loss, he said.
Examples include delaying certain building maintenance and delaying the expansion of the hospital’s Kingdom Internal Medicine practice on Breezy Hill.
“That practice is starved for space and bursting at the seams, but we will have to delay that,” Bengtson said.
Bob Hersey, the hospital’s CFO, said the sequester dictates a 2 percent reduction in medicare payments to all the country’s hospitals. Medicaid is not affected, he said.
Northeastern Vermont Regional Hospital maintains an annual budget of about $64 million, Hersey said. It employees 410 full-timers and 120 part-timers, he said.
The hospital has been planning for sequestration since this winter but nobody at the time knew if it would happen or not, Hersey said.
“We’ve built into the upcoming budget the idea that sequestration or other reductions would occur,” Hersey said. “We’ve put off projects or purchases in the budget. Delaying them won’t affect the quality of patient care.”
The hospital does not expect any relief until at least September 30 of next year, Hersey said.
Like Northeastern Vermont Regional Hospital, Northern Counties Health Care in St. Johnsbury and CALEX Ambulance Service in St. Johnsbury will suffer from sequestration. Neither organization plans to cut employees.
“It certainly affects us on the bottom line,” said CALEX CEO Michael Wright. “I don’t expect, hopefully, any layoffs related to it.”
Tom Pitts, CFO at Northern Counties, said the same. The organization is impacted but plans to manage it rather than layoff workers, he said.
“It isn’t going to be a significant impact,” Pitts said. “We’ll get less money. We’ll just have to manage.”
