These are unprecedented times. Healthcare in our country is in a whirlwind of change. At Salinas Valley Memorial we are taking steps now to be able to continue to provide high quality care for our patients, now and in the future. This process is challenging, but as a result we are a more effective and efficient hospital.
Responsible leadership calls for decisive action during challenging times. We will continue to lead Salinas Valley Memorial with the strategic vision that has made it the world-class institution it is today, with growing partnerships such as the one with Stanford Hospital and Clinics in our Neonatal Intensive Care Unit and the Stanford Cardiac Surgery Program at Salinas Valley Memorial. We are moving forward on our commitment and responsibility to protect and develop the valuable resource that is Salinas Valley Memorial Healthcare System.
Salinas Valley Memorial is a Public District Hospital — meaning it is owned by the residents of our Hospital District. We are responsible to them, as well as every patient we serve. This is not a private, for profit hospital with shareholders. Any margin that remains after our operating expenses is reinvested into the organization and community outreach projects. This is how we purchase technology and equipment, bring new services to the District, maintain our infrastructure, recruit and retain the best physicians, nurses and technical staff. A margin is essential to maintain the quality care our patients have come to expect. We remain one of the area's largest hospitals, employing approximately 1900 people with an annual payroll of $235 million. We are a top performing hospital in the state, and we intend to keep it that way.
The worldwide recession is impacting hospitals across the country. According to the American Hospital Association, approximately 9 out of 10 hospitals nationwide have had to make cutbacks to address the current economic situation. Managing a hospital requires close attention to labor costs, since approximately 65% of our costs are salaries, wages, and benefits. A study shows that the staffing levels at Salinas Valley Memorial are in the upper percentile compared to other California hospitals. In order to keep costs down for the people who use our hospital, it is important that we staff appropriately. Many factors are converging to force this issue right now - high unemployment has left people without health insurance, forcing them to defer medical attention; more people are unable to pay their hospital bills, resulting in $15 million in charity care at Salinas Valley Memorial; and the state has mandated unfunded seismic retrofitting that is taking money out of cash reserves. It is imperative to run the hospital in the most efficient way possible. In our case, as in hospitals across the country, that means reducing the workforce because staff costs represent so much of our budget.
In an attempt to reduce staffing levels to meet a reduced census, we offered voluntary buyouts to employees last year, starting with management. In all, 40 management positions were eliminated—the largest single job classification impacted in the reduction. Voluntary buyouts did not reduce costs enough, and last month the organization needed a further reduction in work force.
While this is unquestionably the right thing to do for our organization, our community, and the future of healthcare in our region, these decisions are some of the most difficult we have ever faced. These people affected are valued colleagues — our longtime friends and trusted co-workers. However, the decision to restructure our organization is necessary, and as a result our hospital will be in a stronger position to continue to deliver quality healthcare for the residents in our District and surrounding areas.
Be assured — quality continues to be our guiding principle and a center point of our mission to "provide and promote comprehensive quality patient care" as we "promote a caring, concerned, compassionate healthcare delivery system environment." In every case Salinas Valley Memorial continues to meet or exceed the state mandated guidelines of nurse/patient ratios. We will make sure the needed resources are available to care for every patient that entrusts their care to us. Our leadership remains on guard, with an eye toward the ever-changing marketplace, ready to act as necessary; to do what it takes to keep us on the leading edge of change. That is our promise to you, the region we serve.
SVMHS Board of Directors
Jim Gattis, President
Deborah Nelson, MS, RN, Vice President
Pat Egan, Secretary
Harry Wardwell, Treasurer
Nathan J. Olivas, Assistant Treasurer
Sam Downing, MBA, MPH