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Financial update (4/15/18)

15 Apr 2018

Health care is changing quickly. How is Salem Health responding?

By: Cheryl Wolfe, president and CEO

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As you may know, most Oregon hospitals struggled to meet their financial goals last year. Salem Health was an exception, in large part due to the foundation of Lean work you helped build. We are creating a habit of reducing waste and increasing efficiency.

This year is different. We continue to face the growing pressure of reduced reimbursements. The legislature enacted a tax that cost us $5 million, close to 8 percent of our annual capital needs every year. Combined with unpredictable fluctuations in the patient census, hitting our financial targets as we close the fiscal year is a challenge. These targets are important as we save for the capital investments needed over the next decade.

The gap between our revenue and our financial targets is about $1.5 million a month for the remainder of the fiscal year. To fill the gap, we instituted three furlough days for support staff and have asked vice presidents to come up with savings in their divisions. We solicited provider input at each decision point. Our main goal was protecting patient care.

This is not a crisis, but an event our Lean philosophy has prepared us to handle. Long term, we are focused on Lean work over job reductions to reduce costs. The health care status quo involves financial fluctuations and smaller margins. We have the people, plans and resources in place to change and adjust as needed.

We share the goal of keeping care local, something we can’t do without one another. I appreciate your partnership and continued commitment to our patients. Thank you for being a part of the health care community here in the mid-valley.