The Cleveland Clinic notified employees Wednesday that a plan to cut $330 million in expenses in 2014 will likely include layoffs.
As part of its cost-cutting strategy, the Northeast Ohio health-care giant is offering a voluntary early retirement package to about 3,000 employees by late October, spokeswoman Eileen Sheil said.
The Cleveland Clinic is Northeast Ohio’s largest employer, with about 44,000 employees.
Hospitals throughout the nation are taking steps to reduce costs, citing lower payments from Medicare and Medicaid and expected changes from federal health-care reform, commonly called Obamacare.
Dr. Toby Cosgrove, Cleveland Clinic president and chief executive, shared the health system’s plans to reduce operating expenses by roughly 6 percent during a regularly scheduled quarterly employee meeting.
“We know we’re going to get paid differently and reimbursed less to do more,” Sheil said. “ … It will affect the workforce, but we’re not sure how yet. There will be a reduction.”
The budget cuts don’t affect the Cleveland Clinic’s recently announced tentative deal to acquire Akron General Health System with national hospital chain Community Health Systems, Sheil said. If the deal goes forward, the Cleveland Clinic will have a minority ownership stake in Akron General.
“This can’t all be about cost-cutting,” she said. “We have to grow.”
The Cleveland Clinic is reducing costs for supplies, travel and vendor contracts and eliminating duplicated services when appropriate, Sheil said. However, employee-related costs account for about 60 percent of expenses.
The health system’s operating expenses totaled about $5.5 billion last year, including $3.5 billion in salaries, wages and benefits, according to the health system’s annual financial statements.
“We can do as much as we can to not affect the workforce, but that’s a difficult thing to do,” Sheil said.
Decisions about potential layoffs will be made after January, she said.
Other hospital systems in the region are taking similar cost-cutting measures.
On Wednesday, Akron-based Summa Health System confirmed it laid off 58 workers this week and cut hours for another 46 employees to reduce expenses by $8.2 million. Another 132 open positions also will remain unfilled as part of the cost-saving measure.
Akron General Health System reduced its workforce this year by 250 full-time employees, including 132 who were laid off in February. The rest of the positions have been cut mostly through attrition, according to health system officials.
Cheryl Powell can be reached at 330-996-3902 or cpowell@thebeaconjournal.com. Follow Powell on Twitter at twitter.com/abjcherylpowell.
