Kaiser Cutting 1,850 Jobs Statewide, 650 in Region

Kaiser Permanente’s surprising announcement last week that it would eliminate 650 jobs in Southern California and 1,850 statewide created concerns among health care analysts, who anticipate further job losses among hospital districts as the economy takes its toll.

The Oakland-based health maintenance organization, or HMO, which serves half a million members in San Diego County and has 135,000 employees in California, said Aug. 11 that it would be cutting 500 union and 150 nonunion jobs in administrative and service positions during the next few months as it grapples with reductions in Medicaid reimbursements that take effect next year, declining membership and other financial concerns.

Kaiser did not say how many jobs will be eliminated in San Diego, where the nonprofit health system employs 7,000 staff members and 830 doctors.

“What we’re going to try to do is put people in other positions within the organization,” said San Diego-based Kaiser spokeswoman Casey Hart. Employees who accept voluntary separations and early retirement offers would be offered “generous” severance packages, she said, and extended health care benefits.

Kaiser has seen its membership decline in recent months, with 35,000 leaving the system in the first half of the year. It reported 8.6 million members remaining.

Trend May Continue

As more employees lose their jobs, and, as a result, their health care benefits, analysts say hospitals will have to make some important decisions.

“If it gets a lot worse, I think we could possibly see hospitals begin to look at curtailing services,” said Steve Escoboza, president and CEO of the Hospital Association of San Diego and Imperial Counties.

Already in San Diego, hospitals have cut back on their equipment purchases, frozen hiring and reduced hours for some employees.

In June, Palomar Pomerado Health, which manages a hospital district covering 800 square miles, said it was trimming 86 employees, including some managers, from its 3,600-employee payroll to offset patient care costs. It also reduced work hours and eliminated vacant positions, saving the district an estimated $7.5 million.

Scripps Health, a nonprofit health system with five local hospitals, said this year that it was scaling back plans to remodel or expand facilities. And Tri-City Medical Center in Oceanside is trying to close a hole in its debt due to interest rates that have cost the district $750,000 a month.

Adding to hospitals’ concerns, patients are increasingly putting off elective procedures because of high-cost deductibles. Hospitals typically profit off those procedures.

All of the forces have created a challenging environment for health care providers, including doctors who care for the uninsured struggling with Medi-Cal reimbursements, Escoboza said.