KentuckyOne's CEO cites health care reform as reason for layoffs

St. Joseph Hospital on South Broadway
St. Joseph Hospital on South Broadway

The recession has come to health care — in large part because of the Affordable Care Act — and the problems that it presents are not unique to KentuckyOne Health, its CEO said Wednesday.

Ruth Brinkley, president and CEO of KentuckyOne Health, said the layoffs and loss of beds her organization is facing are challenges, but patients should be able to get the medical care they need.

Brinkley spoke to The Herald-Leader's editorial board Wednesday following news this week that KentuckyOne Health, which employs 15,000 people and runs St. Joseph Hospital and St. Joseph East in Lexington, is facing a $218 million deficit and is looking at cutting staff and reducing the number of acute-care beds.

Brinkley declined Wednesday to cite specifics about staff reductions or facility cuts. However, she said that the cuts were not being made "across the board" and that each hospital in the KentuckyOne system was being looked at independently.

"We can't afford to provide every service in every location," she said.

That includes examining duplicate services at big-city providers such as Jewish Hospital & St. Mary's HealthCare and the University of Louisville Hospital in Louisville, which all joined to become KentuckyOne Health more than two years ago, along with smaller hospitals in Berea, London, Mount Sterling, Campbellsville and Bardstown.

The issues facing Kentucky One Health might be challenges to other health care providers in the state, too, said Mike Rust, president of the Kentucky Hospital Association.

"These are challenging times, and our hospitals are all feeling the pressures of declining reimbursements," he said, referring to reimbursements from the federal government for Medicare and Medicaid that are tied to the Affordable Care Act.

Layoffs and reorganizations are happening across the country, he said.

"We are seeing this from the East Coast to the West Coast."

Dr. Michael Karpf, executive vice president for health affairs at the University of Kentucky, said UKHealthCare was not currently experiencing a financial landscape as serious as that of KentuckyOne Health. UK, he said, has focused on building partnerships throughout the state and on advanced subspecialty care. It's a strategy that is working well, he said, adding, "We are very busy with high patient volumes."

Ruth Ann Childers, spokeswoman for Baptist Health of Lexington, said the system, in anticipation of the Affordable Care Act, was saving money in other ways, such as a joint purchasing agreement announced last week between Baptist Health and Norton Healthcare. Under the five-year agreement, the groups will work together on the acquisition and distribution of medical and surgical supplies. It is expected to save about $15 million, according to a news release from Baptist Health and Norton.

KentuckyOne Health employees who are losing their jobs will be told by their supervisors during the next few weeks, Brinkley said, with overall staff reductions and changes to facilities announced to employees via YouTube video posted through and releases distributed through the hospital system and the media.

A severance package for employees has not been determined, she said.

The cost-saving measures, she said, reflect a dramatic shift in how care is paid for under the Affordable Care Act. The law attaches more reimbursement for service and quality measures instead of simply inpatient hospital stays. Inpatient hospital stays have long been the core of hospital financial stability, she said.

Hospital systems are becoming health care systems with a focus on preventive care and wellness, she said.

In the long run, patients will benefit from this type of care. But, she said, it is a major transition as far as the business model is concerned.

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