PeaceHealth Oregon Region, which provides hospital and health care services in an eight Oregon counties, announced Friday it will eliminate the equivalent of 70 full-time positions from its payroll in response to deteriorating economic conditions that have resulted in increased expenses for uncompensated care.

Accounting for attrition and other factors, the actual reduction in force will involve 57 employees.

The story was reported by KVAL-TV in Eugene. Here’s the report:

The layoffs are part of a plan to reduce expenses by $7.5 million on an annual basis. The latest cutbacks are in addition to a $10 million expense reduction plan announced in late January that resulted in the elimination of 20 management positions and the equivalent of 17 full-time positions in Food Services. Through a combination of attrition, reduced hours and other factors, the actual January layoff involved 13 employees.

In addition, all PeaceHealth Oregon Region managers took pay cuts ranging from 8.5 percent for the region’s Executive Team to 4.5 percent for its 270 management personnel. Other reductions were made in supplies, travel and overhead (non-patient care) departments.

“Even though it provides an essential service, PeaceHealth is affected by this deteriorating economy, as are other Oregon and Northwest health care organizations,” regional Chief Executive Officer Mel Pyne said in a press release.

“Realistically, we need to plan for a longer economic downturn where unemployment is in the 12 percent to 15 percent range, growth is slower than initially projected and uncompensated care continues to increase.”

Pyne said January losses were $1.4 million greater than anticipated. Uncompensated care expenses – the combination of charity care and bad debt – were almost a million dollars higher than projected in January. This comes on top of a record $66 million in uncompensated care last year, a 14 percent increase from the prior year.

PeaceHealth’s strategy is guided by a set of principles that place a priority on patient safety and quality of care, and adhere to the organization’s mission, values and vision for the future. Reductions are being made with an eye toward long-term sustainability and the protection of resources devoted to direct patient care.

Though the immediate focus is on expense reductions, the overall strategy recognizes that PeaceHealth is growing and will continue to grow. The organization is actively recruiting surgeons to increase surgical capacity and nurses to maintain excellence in Emergency Department service and response levels.

“These are unquestionably challenging times for our families, our community and for PeaceHealth,” Pyne said. “But we remain committed to our mission of promoting personal and community health, relieving pain and suffering, and treating each person in a loving and caring way. By preserving our resources devoted to patient care and making strategic investments in targeted growth areas, we will ensure that during these difficult times, PeaceHealth remains strongly positioned to carry out its essential role in serving the community’s health care needs.”

PeaceHealth is a non-profit healthcare system that operates St. Joseph Hospital in Bellingham, as well as other healthcare facilities in Alaska, Oregon and Washington.

PeaceHealth, the San Juan Community Hospital Committee and the San Juan County Public Hospital District No. 1 have negotiated a 50-year contract that would allow PeaceHealth to build and operate a hospital on San Juan Island. The hospital district commission is expected to vote on the contract March 18.

According to the proposed contract, PeaceHealth would bear two-thirds of the cost of buying land for and building the hospital, estimated at $29.8 million. One-third of the cost would be raised philanthropically by the San Juan Community Hospital Committee.

The property taxes you pay now to the hospital district would be passed on to PeaceHealth to subsidize healthcare services.

PeaceHealth would build an EMS facility at the new hospital and sell it to the hospital district, which would presumably use proceeds from the current Inter Island Medical Center property. PeaceHealth would be responsible for all financial liability of the hospital.

The contract is available for public review at the medical center. It is also posted on SanJuanJournal.com.

Proponents hope construction will begin in 2011, with the hospital opening in 2012.

The day the hospital opens, Inter Island Medical Center would close. The hospital would be overseen by a governing board appointed by PeaceHealth but consisting mostly of islanders. The governing board would be directly responsible for the operation of the hospital, but would provide annual reports to the hospital district commission.

The hospital district commission would continue to be directly responsible for the operation of San Juan Island EMS.

Proponents say the hospital would provide many medical services for which islanders must now travel to the mainland. They say it would bring 24/7 medical care to the island, would replace an aging facility, and would yield better Medicare and Medicaid reimbursements for services.

Inter Island Medical Center is actually a clinic and services there are reimbursed at the rate for a doctor’s office visit.

Dr. J. Michael Edwards, a hospital district commissioner and co-chairman of the San Juan Community Hospital Committee, has said maintaining the current level of clinic-based service wouldn’t be possible without increasing taxes. And the situation is going to get worse, Edwards said in an earlier interview. “We’re facing a 16 percent Medicare fee-for-service reduction in 2009.”

PeaceHealth expects the new hospital would break even in three years and be profitable after that. Profits generated locally would be invested in on-island medical care, including equipment.

While the contract refers to the proposed hospital as a “Combined Clinic and Hospital Facility,” proponents say it will actually be an “integrated medical center” because it would integrate a variety of services at one site: inpatient care, outpatient care, diagnostic services, and emergency medical care.

Inpatient surgeries would still be referred to mainland hospitals. Heart attack and stroke patients would still be taken to mainland hospitals. Babies would still be born on the mainland.

Services that would be provided on-island: Outpatient surgery, chemotherapy, cardiology, diagnostics and imaging, gastroenterology, oncology, rheumatology, and treatment for body injuries and neurological degenerative disorders.

Patients could stay in the integrated medical center for observation and short-term care after surgeries. There would be 10 hospital beds.

The medical center would be about 42,242 square feet, including 24,492 square feet of clinic space for doctors and specialists. Inpatient and outpatient space would comprise 14,250 square feet; the emergency department would comprise 3,500 square feet. The staff would grow from 25.3 full-time equivalents to 44.5.