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Ascension Health layoffs may signal industry shift

Karen Bouffard
The Detroit News

Recent layoffs at Ascension Health’s 14 Michigan hospitals could foreshadow similar moves across the industry as hospitals cope with uncertainty from Washington, according to health care analysts.

Providence Park Hospital in Southfield.

Ascension Michigan has laid off at least 500 employees including managers, nurses and other staff. Spokesman Brian Taylor did not provide details Tuesday, but confirmed that the Catholic health system “has transitioned close to 500 associates across the state as we implement staffing plans focused on quality and safety.”

A memo that was sent to employees last week and obtained by The Detroit News suggests more layoffs are to come. The memo began with a prayer during a time of “transition and change.”

“Overall, the reduction is approximately 600 positions from an associate-base of 26,000, or approximately 2.3 percent,” said the memo from Gwen MacKenzie, a vice president and Michigan market executive with Ascension Michigan. “Let me assure you that right now we are launching numerous rapid growth tactics designed to drive current successful service lines and create new business lines.”

In a Monday story by Crain’s Detroit Business, which first reported the layoffs in a series of stories this month, MacKenzie said more layoffs are expected.

Many hospitals across the country added staff following implementation of the federal Affordable Care Act in 2013 in order to meet increased demand for health services. In Michigan, hospital employment grew to 228,000 last year, up from 219,000 in 2013.

Hospitals are reconsidering their outlook, industry analysts said Tuesday.

Earlier this year, Congress abolished the requirement that all Americans have health insurance as part of the Republican’s tax package, and the Trump administration eliminated tax credits for health insurers, causing instability in the health insurance market. Currently, some Republican lawmakers are pushing changes that could reduce funding for Michigan’s expansion of Medicaid, called the Healthy Michigan Plan, which insures nearly 673,000 Michigan residents.

Ascension Michigan is part of the St. Louis-based Ascension Health, the nation’s largest nonprofit hospital chain. The Catholic hospital chain owns 141 facilities in 24 states.

Marianne Udow-Phillips, executive director of the Center for Healthcare Research & Transformation at the University of Michigan, said hospitals as well as national chains like Ascension and Tenet Healthcare, the Detroit Medical Center’s for-profit owner, are struggling with the uncertainty.

“If we look at Michigan providers, generally they’ve been doing better because of the Medicaid expansion, the fact that the marketplace has been pretty robust (and) we’ve had relatively low rates of uninsured people,”Udow-Phillips said Tuesday.

“But I think one does really have to look out a little bit to see what they might be looking at down the road.”

Metro Detroit’s Henry Ford Health System and Beaumont Health system said they haven’t laid off workers, and no layoffs are planned. There have been layoffs at the Detroit Medical Center.

“Like hospitals across the country, DMC has been making adjustments to its staffing structure, which could reach up to 3 percent of its workforce of 11,000,” DMC spokesman John Truscott said Tuesday. “The majority of the layoffs have been related to realigning the management structure.”

Udow-Phillips noted that, in addition to uncertainty at the federal level, Michigan legislators are considering a proposal to add work requirements to the Healthy Michigan program.

“All of these things mean we could be seeing an uptick in the percentage of people who are uninsured,” she said. “I think hospitals, in particular, are looking out a little ways to say: ‘Yes, we’ve had reductions in charity care, and reductions in uncompensated care costs because of the expansion of coverage, but is that going to stay robust over the next year or two.’

Minneapolis-based analyst Allan Baumgarten, author of the Michigan Health Market Review, said the market as well as Ascension Health’s growth likely contributed to the decision to reduce staff.

“I think that the data for 2017 will show perhaps a less profitable year for the hospitals than they enjoyed in 2015 and 2016,” Baumgarten said. “The other thing is that Ascension (has) made acquisitions in Michigan, they’ve made acquisitions in other parts of the country, and I think they’re taking a long term view (of) what’s required in terms of finding efficiencies, finding cost savings in the new hospitals they’re acquiring in places like Michigan and Illinois.”

Ascension's Michigan hospitals and clinics

Ascension Crittenton Hospital- Rochester

Borgess Medical Center - Kalamazoo

Borgess Lee Hospital- Plainwell

Borgess Pipp Hospital-Dowagiac

Genesys Regional Medical Center-Grand Blanc

St. Mary's of Michigan-Saginaw

St. Mary's of Michigan- Standish

St. Joseph Health- Tawas

St. John Hospital-Detroit

Providence-Providence Park Hospital- Southfield

Providence-Providence Park Hospital- Novi

St. John Macomb-Oakland Hospital- Warren

St. John Macomb-Oakland Hospital- Madison Heights

St. John River District Hospital- East China Township