LUBBOCK, TX (KCBD) - After dozens of Covenant employees are laid off, hospital officials explain why. On Thursday, 48 people lost their job. This comes nearly a week after Covenant accepted 96 voluntary resignations.
With the eliminations, Covenant says they will save more than $7-million a year, and with the recession just now hitting health care and the unknown of what the future will hold, Covenant says this was the only option. "These situations are not insignificant to us because we are affecting 48 people and their families today," said Covenant Interim CEO Jim Houser.
It wasn't an easy decision, but a necessary one Houser says. Covenant employs 5,000 people, and the goal was to affect as few of those jobs as possible. "It's a trailing business in the recession so when there is a recession it impacts us usually later than most so we are responding to the recession trends as well," said Houser.
Of the 48 positions eliminated on Thursday, 80 percent of those are in management and administration. The other 20 percent is made up of different positions including clinical and lab workers, but no registered nurses lost their job.
Houser says another reason for cutting back is major changes could be on the way as a result of the national reform movement and Covenant needs to be ready. "There are changing going on in healthcare there are changes in regard to reimbursement and we see more changes coming down the road," said Chairman of Covenant Health Board of Directors David Seim.
Seim says he was worried there would be more layoffs. "We were just like any in the community had heard that number was going to be significantly higher so there was a significant sense of relief that we were only talking about 48 positions," said Seim.
That's a number Covenant says will not be growing."I wouldn't anticipate any more of this in any time frame," said Houser.
For the 48 people affected, Covenant says it is offering outplacement and counseling services during this difficult time.
According to the Fitch Group, Covenant's earnings (before interest, taxes, etc) are down from 9.1 percent percent last fiscal year to 7.1 percent for the 10 months prior to April 2009.
Fitch also says Covenant has $1.3 billion of cash on hand, which is enough money to operate for 128.4 days. Fitch has a stable outlook for Covenant and expects, "The cost saving measures outlined by management will be realized and that profitability and liquidity measures will improve."
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Covenant Health System has second round of layoffs
Covenant Health System began a second round of layoffs affecting 48 people just a week after administrators accepted 96 voluntary employee resignations.