This week our Alliance partner, Meritus Health in Hagerstown, announced that they were eliminating 120 positions by next week. The cut will impact about 60 employees, including 43 with a reduction in hours. As soon as the Meritus announcement became public, the other two Alliance Health hospitals were contacted by the local media in Frederick and Cumberland as to whether or not the staff reduction was related to the alliance. The answer is no.
Over the next few years, there will be less positions because of the alliance, but the objective is to control the reductions through retirements, turnover and attrition. As few people as possible will be impacted through the creation of a Management Services Organization or MSO. We are projecting considerable savings through the MSO, but at the same time recognize the importance of jobs in each of our communities. The MSO savings will also allow us to save dollars that we would not be able to if we didn't form the alliance.
We can certainly sympathize with both the leadership at Meritus as well as the employees as we took a similar step in 2012 when we had a net loss from operations. When over 75% of our operating budgets are staff and “stuff,” there are only so many places to look for savings. In FY'12, WMHS reduced our operating budget by $8 million; Meritus is projecting a $6 million to $7 million savings through their reduction.
All hospitals are feeling the impact of changes in health care and we have to work together to ensure that care delivery improves while we reduce the cost of care. This is why our new alliance, Alliance Health, with Meritus, Frederick and WMHS, is so important for both the current day as well as the future.