Over the last two weeks St. John’s Medical Center told roughly 60 part-time employees that as of July, they wouldn’t accrue additional paid time off. The other news: As of 2020 they will no longer be eligible for employer-provided health insurance.
“Honestly, it’s a really tough decision,” Human Resources Director Thom Kinney said. “I definitely feel for the employees that this impacts.”
The decision, estimated to save $1.2 million per year, stemmed from increasing costs and the hospital’s desire to continue offering raises to full-time employees. Employees affected by the change include singles, couples, single parents and families who span departments from the pediatric intensive care unit to the front desk.
Part time is defined as working fewer than 60 hours per pay period. The hospital estimated an employee costs $20,000 on average in health insurance.
Five years ago the hospital’s cost of employee health care was approximately $6 million, Kinney said. At over $12 million last year, that cost was more than double that. Although the hospital has added approximately 150 employees over that time the percentage increase is higher than expected, he said.
“It’s just not sustainable to have those expenses growing at such a higher rate than the hospital is growing,” he said.
Kinney said part-time employees will keep accrued paid time and are grandfathered into the hospital’s child care program. Employees may be able to increase their hours and retain their benefits by working an additional shift or two in a pay period. St. John’s is exploring splitting open positions — of which there are 42 — among current employees to give part-timers a boost.
The hospital is also providing counsel on the Affordable Care Act marketplace, where part-time employees are likely to qualify for subsidies but may pay more for lesser coverage.
New part-time hires will be affected by the change starting Feb. 1, but CEO Dr. Paul Beaupre said the hospital doesn’t plan to fill many part-time slots. In the past three years, it has reduced part-time staff from 15 percent to 13 percent.
St. John’s Board of Trustees Chairwoman Cynthia Hogan said the decision to cut part-time benefits was formalized at the end of 2018 but the idea has been in the works for a while.
“The trustees fully support the administration on this because we’ve been talking about this for a long time,” she said.The financial cut is part of a broader hospital strategy, Beaupre said, to continue offering merit and cost-of-living raises to full-time employees. The change, he said, should help St. John’s attract and retain full-timers — one of whom costs the hospital less in benefits than two part-time employees.
St. John’s gave employees an average 3.5 percent raise last year, Beaupre said.
“We have to figure out ways to either manage expenses or enhance revenues to be able to support that kind of raise,” he said.
Revenue siphoned off by a competing MRI facility, Teton Sports and Spine Imaging, didn’t directly influence the decision, Beaupre said, but is “one of many pressures we have on us.” The hospital calculates it has lost approximately $1 million to the new facility.
Shaun Andrikopoulos, founder and chairman of Teton Sports and Spine Imaging, declined to comment for this story.
During the trustees’ annual meeting Tuesday afternoon, the hospital acknowledged that halfway through its fiscal year, its operating revenue is about $1.6 million in the red. It has generated approximately $1.3 million in cash and aims to break even by the end of the fiscal year, Beaupre said.
“The way to do that is to watch staffing really closely right now and to start looking carefully at every expense that we have,” he said.
The administrative team is meeting with Mark Bertolini, the former president of Aetna, to talk solutions as well.
“Really,” Hogan said, “the bigger picture is that everybody is struggling with this.”