In an internal letter sent out to employees earlier this month, Phoebe Putney Health System CEO Joel Wernick said that uniform bonuses and merit increases would not be going to any Phoebe employee this fiscal year. (Albany Herald file photo)
ALBANY — Phoebe Putney Memorial Hospital not meeting its financial goals from the previous fiscal year has resulted in the elimination of uniform bonuses and merit pay increases this fiscal year, officials at the hospital say.
The announcement was made in an internal letter sent out to employees earlier in the month by Phoebe CEO Joel Wernick.
The uniform bonus, which has been given to employees to help offset the cost of the uniforms they are required to wear, was instituted more than 10 years ago. The annual system-wide incentive plan has distributed more than $28 million to Phoebe employees for contributing to the organization’s annual performance, Wernick said in the letter.
The organization, officials say, is measured by quality, service and financial benchmarks set at the beginning of each fiscal year. The board of directors sets the financial goal, which must be met to receive the annual bonus. This year, Phoebe met its quality and service goals, but did not meet the financial goal.
“There were so many things going on that we did not meet the budget goals for the last fiscal year,” said Rick Smith, corporate director of public relations and marketing for the hospital.
Officials say merit increases have also been cut due to last year’s financial performance and the need to reduce expenses for the current fiscal year, which began Aug. 1.
“This is impacting everybody, including leadership, including me and Mr. Wernick,” Smith said. “(It impacts) anyone who is a Phoebe employee.”
Phoebe Putney Health System announced in April that, due to state reductions in Medicaid reimbursement for medical services provided, Phoebe would lose approximately $2 million annually over the next nine years. An additional loss of millions of dollars caused by the federal implementation of the Affordable Care Act resulted in the health system starting a process several months ago involving the re-evaluation of management positions and a streamlining of the organization. As a result of this, the decision was made to eliminate “fewer than 10” management level positions.
Those impacted by the job cuts were given the opportunity to move into other vacant positions, which many of them did, officials said in July.
Also, in the last fiscal year, costs for the Phoebe Employee Health Plan were $15 million more than budgeted, charity and indigent care increased and bad debt write-offs were $20 million more than budgeted, the letter distributed to employees said.
These are among the factors that have created a “perfect storm” in the health care fiscal environment. Such factors have impacted not just Phoebe, but the health care industry as a whole, Smith said Wednesday.
“Hospitals have to change the way they operate,” he said.
The financial goal set by Phoebe’s board for Fiscal Year 2014 is $8 million. Achieving this mark may ensure that future cuts don’t come next year, but in meantime, officials say a hard look is being taken on expenses that can be reduced to make sure the goal can be met — and help bring bonuses back.
“We are identifying ways to reduce expenses, because we don’t want to be in this position again next year,” Smith said.