Next Phase of Organizational Redesign: Further Cost Restructuring at Wake Forest Baptist, Additional Positions Eliminated

May 1, 2014

Continuing efforts launched in November 2012 to transition to value-based health care and driven in part by rate cuts from government payors, Wake Forest Baptist Medical Center today said it would reduce the size of its workforce by approximately 350 employees to help close the increasing gap between growing expenses and declining reimbursement from federal and state health insurance and other revenue sources.

The Medical Center employs approximately 14,686 faculty and staff at all of our locations.

Today’s announcement was not unexpected given recent national announcements. One week ago, Moody’s Investor Service, reporting on the fiscal state of not-for-profits in the health care sector, said, “Factors leading to the decline in performance include low rate increases from commercial payors and rate cuts from Medicare and Medicaid.”

John D. McConnell, M.D., chief executive officer, Wake Forest Baptist Medical Center, explained, “Letting people go is never an easy or a hasty decision. It is like losing family. We see them every day and work side-by-side. This action was taken in a very thoughtful and careful manner. It is truly unfortunate and very hard on everyone, especially those who will leave us. I’d like publicly to thank each and every one of those affected for their dedication and service during these challenging times.”

“Unfortunately, the reality is that health care is highly dependent upon external sources for revenue,” McConnell said. “As revenues decline and expenses continue to increase, we must realign our cost structure to attain fiscal balance in order to ensure we efficiently provide the quality of care that our patients need. Wake Forest Baptist is committed to reducing its costs in order to make health care and the overall enterprise more efficient and affordable.”

The Medical Center is actively redesigning the organization to be built around community needs for excellent, patient-centered clinical care and efficient appointment access in convenient, low cost environments across the region. While our outpatient volumes are growing substantially, we are clearly seeing a decline in inpatient volumes as are most other institutions. Most national health care forecasters say the reduced inpatient volumes of the past two years being experienced across the country are the “new normal” as health reform and high deductible plans have an impact.  

Since Wake Forest Baptist’s initial announcement in November 2012, the state has reduced Medicaid payments to providers statewide and early last year decided not to expand Medicaid. In addition, managed care rates have not increased as quickly as expected.

The Medical Center began notifying employees late last month that their positions had been eliminated. Employees whose positions are eliminated are being given 45 days of paid notice with health benefits, followed by a severance package determined by length of service and position.

The Medical Center hopes to mitigate the effect of reductions and is making every effort to assist employees. There are several hundred open positions in active recruitment at the Medical Center and it is hoped that some of the newly released employees can be placed in those open positions. In addition, the Medical Center is working with other employers in the area to determine potential openings and will assist with placement support, including resume preparation.

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