Reid Health details restructuring effort to reduce costs
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Richmond-based Reid Health this week announced efforts to reduce costs and streamline operations through a restructuring plan. The health system blamed a widening gap between rising expenses and reduced reimbursement rates from insurance providers for the move, which will result in some job cuts.
Reid said reimbursements haven’t kept up with the rising costs caused by inflation, which has resulted in “major financial issues unlike any Reid has dealt with in the past.”
In a statement to IIB, Reid said the annual financial gap is projected to be about $48 million.
Additionally, the health system has seen reduced volumes, particularly in inpatient services, continued challenges with “effectively reduced payments” from many Medicare Advantage programs, and difficulty receiving timely payment from various insurance providers.
“The shortfall between increasing costs and the amount we receive is growing,” CEO Craig Kinyon said in a news release. “The current model isn’t sustainable, and it’s forcing us to look for ways to reduce costs and be more efficient.”
Reid said it has taken steps over the last few weeks to reduce duplication and costs within its executive leadership and middle management teams, which has led to the elimination of about 25 jobs.
The affected employees have been given the opportunity to apply for other positions, and Reid said some have chosen to stay with the health system, though a specific number was not provided.
Additionally, Reid plans to close its Employee Wellness, Sports Performance, and Massage Therapy departments. The health system’s HealthWorks Fitness Center in Connersville is also slated to close at the end of the month.
“These are the kinds of tough conversations families have around the kitchen table during hard times,” Kinyon said. “When your income is reduced while your expenses increase, changes must occur. That’s the situation we’re in today.”
Reid Health is the latest health system to make big changes in Indiana. Last October, Missouri-based Ascension announced plans to close Ascension St. Vincent Dunn Hospital in Bedford and nine Ascension Medical Group practices in Lawrence County, affecting more than 130 employees.
Indiana University Health also recently detailed plans to close the emergency room and inpatient care services at Blackford Hospital in Hartford City, citing low patient volume.
The IBJ’s John Russell cited a report last year from the Center for Healthcare Quality and Payment Reform that said 14 of Indiana’s 54 rural hospitals are at immediate risk of closing because of continuing financial losses and lack of financial reserves to sustain operations.