The health care system that operates Penrose-St. Francis Health Services is laying off 1% of its workforce of 21,000 people in Colorado and western Kansas.
Centura Health said layoffs are necessary because of rising health care costs driven in part by inflation, supply chain issues, labor costs and fewer patients seeking care.
“We are not immune to the economic challenges facing our country and our industry,” the company said in a statement.
In an email to staff members first obtained by The Durango Herald, Centura Health said it had made some progress cutting costs around supplies, labor and purchases services since starting to make changes in March. The health system chose not to fill positions as part of those measures. But it is still missing its year-to-date budget by $37 million.
“Reductions have become unavoidable,” the email said.
Layoffs were expected to start Friday and continue through Oct. 7, affecting 350 people across the system. Further savings will be achieved by not filling positions, the email stated.
Centura Health is working to find alternate jobs for employees who had their positions cut. Those who are not transferred will receive severance pay and other job support, such as career transition services, the company statement said.
Centura Health is still recruiting and hiring clinical workers, such as nurses, the statement said.
The outlook for other hospitals nationally is grim. A report released by the American Hospital Association on Thursday showed that under the most optimistic projections for 2022, hospital profit margins are expected to be down 37% compared to pre-pandemic levels and more than half of hospitals nationally will be operating at a loss.
Hospital and health system expenses may rise $135 billion this year over 2021, mostly because of rising workforce costs, the report stated.
At the same time, Penrose-St. Francis is building a new $180 million specialty orthopedic hospital that was planned to be part of a $2 billion expansion expected to fund hospitals in Aurora, Fort Morgan and Dodge City, Kan.
The local health care system is also transitioning to new leadership with a new chief executive office coming from Mercy Regional Medical Center in Durango. The search for a new chief financial officer Penrose-St. Francis is underway.