Joe Sluka

Skyrocketing labor, supplies and equipment costs prompted St. Charles Health System to lay off 105 workers and eliminate 76 vacant positions as a way to staunch growing operation costs, the system announced Wednesday.

Layoff notices were being issued to mostly nonclinical staff and will be delivered over the next three days, the health system said in a prepared statement. Laid off workers will receive a severance package and help from job placement services.

“Please note that this is a really difficult time,” said Joe Sluka, St. Charles Health System CEO and president. “St. Charles is experiencing financial difficulties. Through a lot of dedicated work, the financial picture has not improved.’’

The layoffs come at a time when COVID-19 is still causing illness in the community. The hospital reported 16 COVID-19 patients Wednesday, and the number of patients are increasing, Sluka said.

Even with additional efforts, the health system ended April $21.8 million in the red and is facing a 6.7% operating loss.

The news of the layoffs was heartbreaking, said Joel Hernandez, a St. Charles Bend registered nurse who spoke as vice president of the board of directors of the Oregon Nurses Association.

“We have been told that these layoffs will not impact nurse caregivers, but our hearts are with the dedicated, passionate colleagues who are about to lose their jobs as a result of ongoing failures on the part of St. Charles,” Hernandez said. “Previous statements from St. Charles have placed blame for the hospital’s financial woes on the shoulders of the front-line caregivers. This is disingenuous to say the least.”

The layoffs will save the health system about $20 million a year, said Matt Swafford, St. Charles Health System chief financial officer. Through cutbacks to equipment purchases, medical supplies, education and travel and reducing the number of contract employees, the health system hopes to eliminate an additional $11.5 million in costs, Swafford said.

Since 2020, losses have steadily grown, the health system said. They are the result of rising labor costs, particularly with contract labor to fill out its ranks hired during the pandemic, when the health system was running, at times, overcapacity, Sluka said. Also contributing to the operating losses are increases to the cost of equipment and supplies that all came at the same time that the hospital reduced the number of surgeries it performed due to pandemic-related restrictions.

Even with the cutbacks and layoffs, it will take the hospital two years to get back to where it was financially, Sluka said.

“It has taken two long years of the pandemic to get us into this situation,” Sluka said in a prepared statement. “It will take us at least two years for us to get out of it. But we will and we will continue to take excellent care of our community now and in the future.”

The health system is Central Oregon’s largest employer with more than 4,500 employees. It has more than 350 medical staff members and 200 visiting medical staff members, according to the prepared statement.

Hospitals across the state are facing the same situation. Of the state’s 62 hospitals, 42% of them ended the first quarter losing money, according to the Oregon Association of Hospitals and Health Systems.

Oregon’s hospitals have experienced five consecutive quarters where expenses outpaced revenues.

St. Charles has already trimmed $8.8 million from its forecast spending, according to an email sent to employees.

The last time the hospital reduced its workforce was in 2017 when it laid off 30 workers, mainly nonclinical positions. At the time the cutbacks were announced because the Bend-based nonprofit health system had been dealing with financial challenges since late 2016.