Lourdes Medical Center in Pasco announced Wednesday that 19 people have been laid off as part of what officials described as an "organizational restructure."
Hospital officials attributed the layoffs to the rising number of uninsured people and federal and state budget cuts that are cutting into the hospital's bottom line.
"After much deliberation, prayer, discernment and consultation with our Sisters, board and leadership at Ascension Health, we have decided to reduce our work force to just over 2 percent," Lourdes CEO John Serle said in a statement.
Lourdes employs about 800 people, including more than 200 physicians, at 17 locations. Personnel costs amount to about $45 million per year.
The 19 employees were notified of the layoffs Tuesday, hospital officials said.
In addition to the layoffs, Lourdes is reducing the work hours for several more employees and plans to leave five open positions unfilled. The hospital currently is operating under a hiring freeze that officials said will continue.
"Reductions in the work force are at all levels of the organization, including our most senior leaders," Serle said. "Even though we know this is the right thing to do for our ministry moving into the future, it's certainly been an agonizing process."
Lourdes officials have been bracing for significant cuts to its Medicaid and Medicare reimbursements as the state and federal governments contemplate cutbacks for hospitals such as Lourdes with the "Critical Access Hospital" designation.
The Critical Access Hospital Program was created by federal legislation in 1997 as a safety net to ensure people on Medicare have access to care in rural areas.
Hospitals with the designation get higher levels of reimbursement for treating Medicaid and Medicare patients than hospitals without the designation as an incentive to see those patients, but the trade-off is that critical access hospitals can't expand beyond 25 acute-care beds.
Even though Lourdes isn't technically rural, the state deemed it a "necessary provider" in 2005, which recognizes hospitals that care for underserved populations such as seniors and low-income people.
The designation also can be given to a hospital considered financially vulnerable, as Lourdes was in 2005 after several years of losing money. Getting the designation and restructuring -- or "right-sizing," as administrators called it at the time -- helped the hospital turn its finances around.
Frank Becker, Lourdes' chief financial officer, told the Herald in November that Lourdes Health Network -- which operates Lourdes Medical Center, mental health services and physician clinics in the Tri-Cities -- has been operating about $1 million to $3 million in the black in recent years.
But losing critical access status and the resulting cuts to reimbursements could put Lourdes millions of dollars in the red, causing the hospital to re-evaluate the services it is able to provide.
"For 95 years, Lourdes Health Network has been dedicated to our mission. Part of that dedication includes making changes as necessary in order to maintain continuity of vital services in our community," Serle said Wednesday.
Lourdes isn't the first local hospital to reduce its staff in anticipation of state and federal cuts. PMH Medical Center announced layoffs in mid-November in expectation of a $2.3 million loss in state and federal funding.
PMH officials said the layoffs were pre-emptive measures to cut the hospital's budget before Congress and the Legislature adopt their budgets.
The $2.3 million cut would be to the hospital's Medicaid and Medicare reimbursements. That represents about 44 percent of the money PMH gets from those programs.
"All of health care is going through a reform right now," PMH spokesman Fred Lamb told the Herald in November. "We have to maintain the quality of health care delivery as best we can. We need to have a viable hospital that is here to serve the patients and to serve their needs immediately."