By M. Scott Carter
Faced with declining revenue, a lower patient volume, and a "significant downtown" in the quality of its accounts receivable, the Norman Regional Health Care system is expected to lay off "under 200" of its employees this week, its CEO confirmed Monday.
Norman Regional chief executive officer David Whitaker said hospital administrators were working to bring the system's operation level in line with the total number of patients, necessitating a reduction in its workforce.
However, final details about the layoffs have not been completed.
"We don't have all the final pieces together," Whitaker said following Monday evening's meeting of the Norman Regional Hospital Authority. He said the state and federal economy, coupled with a reduction in accounts, and problems in the way the hospital estimated its accounts receivables have contributed to system's financial problems.
"We were too liberal in our estimates of people's ability to pay," Whitaker said. "Folks are not paying their hospital now, like they did two years ago."
Financial reports show that NRH is currently holding about $16 million in bad debt while the system anticipated about $12 million in bad debt for its budget year.
And while administrators said they expect to notify staff by the end of the week, the layoffs are not a surprise to most employees. Last week, Whitaker hinted at the possibility in a letter sent to all staff members.
"In the coming weeks there will be necessary changes in how we do business that will affect us all," Whitaker wrote on Feb. 16. "As salaries and benefits make up almost one half of our operating expenses, as we have to deal with the fact that our volume of services being provided has decreased, there is no escaping that we will also have to look at these areas as we develop our plans."
Norman Regional spokesman Brenda Finkle said administrators were looking at ways to make the system "more resistant" to economic times. "We're looking at ways to improve efficiencies," she said.
In addition, Whitaker said NRH had experienced a reduction in the number of people seeking medical care, an increase in patients who were avoiding elective procedures and clinical factors such as a mild flu season. Those factors, he said, plus a slowing economy, had reduced the hospital's cash flow.
"Due to the general state of the economy, we are seeing longer delays in the turnaround of payments from third party payors and a large increase in the portion of our patient accounts that need to be written off to bad debt as uncollectible," he wrote.
Whitaker said the system also faced a decline "of about $15 million" in the "investment income earned on reserve funds."
"Just as in the past where our growth and solid financial performance have allowed us to offer new programs, expand services and add new staff and equipment, we must now react to the reality of these economic times and act in a responsible manner to operate the health system in a way that brings the greatest benefit to our community," he said.
Whitaker said the system "will have to make some changes in how we currently conduct business."
Headquartered in Norman, the Norman Regional Health System provides health care needs throughout south central Oklahoma. The main facility -- a 337 bed acute care hospital -- offers a full range of medial services, while the NRH-owned Moore Medical Center provides medical, surgical and 24-hour emergency care to residents in Moore and north Cleveland County.
Norman Regional's HealthPlex Campus at Interstate 35 and Tecumseh Road is under development and includes the HealthPlex Professional Building. The system is currently building a $110 million hospital which will feature cardiovascular services, orthopedics, neurosurgery and women's and children's services. It is on schedule to open in the summer of 2009.
The Norman Regional Health Care system currently employs more than 2,300 people full time and partners with about 274 active-staff physicians.
M. Scott Carter 366-3545 scarter@normantranscript.com
