The news on July 19 came as a shock to the South County community. The area’s only hospital, Mee Memorial Healthcare System, was laying off 43 of its 353 employees, nearly 13 percent of the workforce. When he made the announcement, CEO Michael Hutchinson said they had no choice. Decreases in Medicare, Medi-Cal and private insurance reimbursements and long delays in receiving government funding made financial stability for the small rural hospital nearly impossible.
“Forty-three people in a fairly rural place is a huge impact on our community and economy,” Hutchinson says. “It was a hard decision.”
The decision came after months of managers scrutinizing operations and making other cutbacks to bring finances in line, but in the end, analysis showed the hospital and five clinics were overstaffed. Those with the least seniority were laid off first. Some services were eliminated. For example, intensive care will now be done in the surgical care unit, and orthopedic services were cut with plans to transition to a possible third-party solution. No registered nurses lost jobs.
For the last two years, Mee Memorial has been seeking federal designation as a Critical Access Hospital, a program launched by Congress in 1997 to stave off a string of rural hospital closures. Hospitals with the designation can receive cost-based reimbursements through Medicare, increasing revenues. (Twenty percent of the hospital’s patients are on Medicare.) This federal designation makes it easier for them to recruit physicians.
To meet the federal criteria, the hospital had to reduce the number of beds from 94 to 74, which Hutchinson says will not mean patients going without beds, since they were not consistently full.
To help displaced employees, Mee Memorial held a job fair on Tuesday, July 30, with health care employers from both Monterey and San Luis Obispo counties participating.