Edward-Elmhurst Health cutting 234 jobs

Edward-Elmhurst Health is cutting 234 jobs through a mix of layoffs and not filling vacant positions.

Mary Lou Mastro, CEO of the three-hospital system based in west suburban Naperville, outlined the cuts today in a memo to employees.

"This is a difficult message to deliver, and one I know will be felt profoundly throughout the organization," Mastro wrote. "I have no doubt, however, that these changes were necessary to ensure our long term viability."

The move comes less than two months after Edward-Elmhurst announced $50 million in cuts amid financial pressures. In August, Mastro blamed several woes that other hospitals are experiencing, too. Bad debt is climbing because patients with high-deductible health plans either can't afford or won't pay their medical bills. The cost of pharmaceuticals is soaring. Meanwhile, reimbursements from Medicare and Medicaid, the government health insurance programs for the elderly, poor and disabled, don't fully cover how much patient care costs.

Advocate Health Care, the largest hospital network in the state, based in Downers Grove, is making its way through $200 million in cuts. Last month, Centegra Health System announced it was laying off 131 employees and outsourcing another 230 jobs in an attempt to turn around steep financial losses.

Meanwhile, other hospitals are looking to bulk up through mergers or looser affiliations to gain resources. Just today, Little Company of Mary, a small independent hospital in south suburban Evergreen Park, announced it has inked a letter of intent to join Rush, a Chicago-based three-hospital network that's been looking to grow.

The 234 jobs being cut at Edward include 84 layoffs (of those, 36 are on the management team) and 150 vacant roles that won't be filled. Mastro echoed the economic challenges she discussed in August.

"While our volumes remain strong, we are paid less for every patient we see. Our expenses are growing faster than reimbursement from Medicare, Medicaid and commercial insurance companies, and our operating income in fiscal year 2017 was the lowest since our merger," Mastro wrote, referring to Edward Hospital acquiring Elmhurst Memorial Hospital in 2013. "Fundamental changes to our cost structure are necessary to ensure our bottom line improves."

The $50 million in cuts Edward-Elmhurst is making represents about 4% of total expenses. Besides layoffs and leaving roles vacant, the system also is looking for savings in drugs, supplies and vendor contracts.

"While this news is difficult and sad, our future is bright," Mastro wrote. "We have a strong financial foundation and continue to grow as an organization. We will continue to work to focus on growth and providing the quality services our patients have come to expect. It is important for us to continue to invest in our facilities, our infrastructure and our employees. And our commitment to our vision of transforming the healthcare experience with care that is safe, seamless and personal is stronger than ever."

Edward-Elmhurst isn't operating in the red, but the system's profit is shrinking. The network finished its 2016 fiscal year, in June of that year, with $1.2 billion in total revenue.

"Edward-Elmhurst Health cutting 234 jobs" originally appeared in Crain's Chicago Business.