KentuckyOne Health, the system that includes Lexington's St. Joseph Hospital and St. Joseph East, is facing a $218 million deficit and might have to lay off employees.
"At KentuckyOne today, costs are greater than revenue," the organization's employee website states. "To date, the many efforts to reduce expenses, grow services and reverse financial losses have not been enough. KentuckyOne must improve its performance by $218 million by the end of fiscal 2015."
Ruth Brinkley, president and CEO of the organization, said in a 10-minute video posted on the website that she thought KentuckyOne would have to decrease the size of its work force.
"We will do our very best to reduce expenses that do not involve reductions in work force or reductions in the number of employees," she said. "However, I do believe that unfortunately there will be reductions, because we must adjust what we are spending to the amount of money that we get for taking care of our patients."
The organization did not provide more specific information about potential layoffs.
In response to a reporter's questions earlier Monday, KentuckyOne provided a statement, saying that it, "like other health-care organizations in the commonwealth and around the country, is faced with unprecedented changes in reimbursement and a rising cost of delivering care."
Brinkley said in the statement: "For us to continue to serve the health-care needs of our community, we must evolve. Changes in the health-care industry are radical and permanent. We must and we will deliver high quality services more efficiently and differently."
She said in the video that she expected the system would decrease the number of acute-care hospital beds it operates and consolidate some services.
"We cannot afford to provide every service in every location," she said in the video, which she called the first in a series.
Brinkley cited the new health-care reform law as one reason the system was facing this situation.
"We are now paid based on the quality and efficiency of care we provide, and not just what or how much care we provide," she said. "We are becoming more accountable for maintaining and improving the health of entire populations."
To that end, Brinkley said, the system's focus would shift from inpatient hospital-based care to a more wellness-based approach that makes its ambulatory-care centers and primary-care network more important.
She said leadership of KentuckyOne was evaluating how to organize the system's program's and services, how best to configure its facilities, what levels of staffing were needed, and how best to maintain and improve the quality of services.
"Our goal is for Kentucky One to become a fully integrated, financially stable health system within the next two years," she said.
KentuckyOne was formed two years ago, when Jewish Hospital & St. Mary's HealthCare in Louisville merged with the Lexington-based St. Joseph Health System.
In November 2012, the University of Louisville Hospital became part of the system. KentuckyOne oversees most of the university hospital's day-to-day operations, but the facility remains a public asset controlled by a separate board.
The health system, which also includes hospitals in Berea, London, Mount Sterling, Campbellsville and Bardstown, is the largest in the state, with about 15,000 employees.