Tulare County-based hospital operator Kaweah Health may have to institute layoffs of staff if the state of California does not step in and provide financial relief.
CEO Gary Herbst wrote an open letter to Gov. Gavin Newsom, published by Gannett last week, that Kaweah Health is just one of many hospital systems throughout the state that are on the brink of financial collapse due to the COVID-19 pandemic and its after effects.
Herbst said Kaweah Health has sustained a cumulative operating loss of $127 million, lost $29 million from operations in the first three months of the fiscal year and had its cash reserves drop from 130 days cash on hand at the start of the pandemic to 84 days by the end of September.
Kaweah Health is also going to be in default on over $200 million in revenue bond debt after holding a solid A3 credit rating with Moody’s Investors Service before the pandemic.
Herbst pointed to the repeated closure of elective surgeries and procedures by the state as one of the factors leading to the financial crisis, as well as rising inflation and increasing reliance on travel nurses.
“Sadly, with virtually no hope for further COVID relief funds from either the federal or State government, we are faced with no choice but to begin laying off staff (likely in the hundreds), closing services (we just announced to staff that we are closing our skilled nursing unit and our neurosciences clinic), stopping elective surgeries and procedures that are provided at a loss (largely affecting the Medi-Cal population), and taking any and all other steps necessary to stem our losses,” Herbst wrote. “It is gut-wrenching and agonizing, to say the least.”
When asked by The Sun about the seriousness and nature of any potential layoffs, Kaweah Health referred to Herbst’s earlier comments to The Sun-Gazette.
Herbst told the paper that Kaweah Health is trying “as much as possible” to not touch the workforce.
The financial crisis has already resulted in 100 employees throughout the district being laid off.
Kaweah Health has also cut around 100 unfilled positions from its open jobs list, which still has 500 open vacancies, including 240 that are filled by travel nurses.
Herbst said the travel nurses cost around $180-200 per hour while a regularly employed nurse costs about $50-55.
“The biggest impact that will affect us positively is to wean ourselves off of nurse travelers,” Herbst told The Sun-Gazette. “We’re still trying to drive down the rate that we’re paying, which we’ve now had some success.”
Executives and senior management have taken a 20 percent pay cut, and middle management has taken a 10 percent pay cut. Herbst said all of the executives and directors will not receive their annual raise at the start of the year.
“Governor, I’m delighted that our State government has generated close to a $100 billion dollar budget surplus this past year,” Herbst wrote.
“Still, I implore you please remember the ‘good soldiers’ of your State’s district hospitals. In appreciation of their selflessness, please dedicate one-time funding to help assist district hospitals in their financial recovery efforts and reform Medi-Cal reimbursement so that we can avoid disparities in the care of your poorest Californians.”