Citing Obamacare, Cleveland Clinic to Cut $300M, Warns of Layoff

Spokesperson says aim is to 'keep care affordable.'

By + More

Administrators at the Cleveland Clinic announced on Wednesday that the health care giant would be cutting as much as $300 million from its 2014 budget, and that the cuts will likely include layoffs.

"Health care reform has really changed things, and the burden of cost is going to be falling on patients," spokeswoman Eileen Shiel told The Plain Dealer. "We want to make sure we can keep care affordable."

[READ: Hospital of Tomorrow: How the Industry is Facing the Future]

During a regularly scheduled quarterly meeting, Cleveland Clinic President and Chief Executive Dr. Toby Cosgrove told employees about plans to reduce operating expenses by about 6 percent, and cited the Affordable Care Act, also known as Obamacare, as one of the reasons for the cuts.

"To prepare for health care reform, Cleveland Clinic is transforming the way care is delivered to patients," the Clinic's representatives said in a statement. "Over the past several years, we have had an ongoing focus on driving efficiencies, lowering costs, reducing duplication in services and enhancing quality to make health care affordable to patients."

An early retirement package will be offered to about 3,000 employees by late October, Sheil told the Beacon Journal. Any possible layoffs will be considered after January, she added.

"We know we're going to get paid differently and reimbursed less to do more," Shiel explained. "It will affect the work force, but we're not sure how yet. There will be a reduction."

Annual financial statements show that the Cleveland Clinic's operating budget was about $5.5 billion last year, the Beacon Journal reported. The Associated Press reported that staffing and benefits for its 44,000 employees account for more than half of the hospital system's costs.

"We can do as much as we can to not affect the work force, but that's a difficult thing to do," Sheil said. "We've scrutinized the non-employee costs first, but it's just not going to be possible to meet this with those cuts alone."

The Cleveland Clinic isn't alone in cutting costs and trimming its workforce in the face of health care reform. On Wednesday, Summa Health System in Akron, Ohio, confirmed that it was trimming $8.2 million from its budget by laying off 58 workers this week, cutting back the hours for 46 more, and opting not to fill 132 open positions, mostly through attrition. In February, Akron General Health System laid off 132 employees and cut 118 other positions. In 2011, University Hospitals announced $100 million in cuts over two years, and MetroHealth Medical Center laid off 450 people by cutting $30 million and closing a 144-bed skilled nursing facility.

"This has become the new normal," Sheil said. "This has been a conversation that's been ongoing, not just at the Cleveland Clinic but nationally."

More Health Care News: