Largest Area Employers Weather Recession in Similar Ways

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To say 2009 has been a tough year for Central Oregon’s largest employers is putting it mildly, and it’s not a topic that is freely discussed – of the 10 largest employers in the region only three would go on record to discuss how business has fared since October 2008, when the economy dramatically spiraled downward.

According to the most recent forecast released by Oregon’s Office of Economic Analysis, the first quarter of 2009 marks the fifth consecutive quarter of job losses across the state. The annualized drop of 8.2 percent is the largest quarterly employment decline since the second quarter of 1980. The year-over-year employment decline for the first quarter was 4.5 percent, compared to .4 percent at the end of first quarter 2007.

In the first quarter of 2009, almost all sectors either continued to lose jobs or had slower employment growth, according to the forecast. Only two broad job sectors experienced positive growth: education and health services. Four of the 10 largest employers in Central Oregon – Cascade Community Healthcare, Bend Memorial Clinic, Bend-La Pine Public Schools and the Redmond School District – fall into those categories, and while that doesn’t mean things are looking up for the region as a whole, it does provide a bit of a bright spot in the local economy.

Cascade Community Healthcare
In Central Oregon, Cascade Community Healthcare (CHC), operator of the St. Charles Medical Centers in Bend and Redmond, Pioneer Memorial Hospital in Prineville and Mountain View Hospital in Madras, is the largest employer in the region with close to 3,000 workers. So far, it has managed to get through the recession only eliminating 74 positions, although 45 full-time caregivers saw their hours reduced back in February when CHC took steps to control labor costs and capital spending, CHC Chief Executive Officer Jim Diegel said.

“From our perspective, there were two significant events impacting operations at the end of 2008,” Diegel said. “We saw a pretty serious deterioration in investment income during the last two quarters, especially in the fourth quarter. 2008 losses to our investment portfolio were somewhere in the amount of $30 million, a majority of that in the third and fourth quarters. The other major thing that happened was we saw what we call a softening of patient volumes, especially in the fourth quarter, and began to realize some toward the end of the third. Softening volumes in patient activity slowed down our inpatient service lines, and outpatient service areas slowed down too as people began losing jobs, health insurance or as they were becoming anxious in general about the economy. All of that contributed to volumes being pulled way back. I think we saw about a 5 percent reduction in inpatient and outpatient services during the fourth quarter.”

That was not just specific to Central Oregon; it happened at other hospitals throughout the state and the nation. According to the American Hospital Association, nearly half of U.S. hospitals reported they have cut staff. Recent employment information from the Bureau of Labor Statistics also confirms that hospital employment is no longer growing and that the number of mass layoffs for hospitals reported in February 2009 was more than double what it was during the same period in 2008.

Incidentally, enrollment in Central Oregon Community College’s nursing program is at an all-time high.
The majority of hospitals reported that fewer patients are seeking inpatient and elective services; however, many hospitals are seeing more patients covered by Medicaid and other public programs for those in need. Need for hospital-subsidized services such as clinics, screenings and outreach is increasing even as charitable contributions (hospitals paying for care patients cannot afford) are down for many hospitals, according to the AHA survey.

“Today’s findings signal what many of us in health care are concerned about – people put off care when they lose their job, which can complicate health care issues for many down the road,” AHA President and CEO Rich Umbdenstock said. “At the same time, the fact that hospitals are cutting staff challenges the notion that hospitals are recession proof.”

Diegel said the recession has affected morale among caregivers at CHC, although a majority of the company’s employees understand what is happening.

“That pain has shown up in our workforce, there’s no doubt,” Diegel said. “People are discouraged but at the same time many caregivers are thankful they are still employed. At the same time, our patient satisfaction numbers are actually improving. During a time when we are trimming staff and people are taking pay cuts what that tells me is our staff is resilient and is not letting their disappointment show up at bedside or at the point of service. It’s very easy to be angry at what is unfolding around you.”

Redmond Economic Development Manager Jon Stark said he’s aware of similar situations throughout Central Oregon.

“(Large employers) looking at ways to retain their top performers through reduced hours or shifts has been difficult, although there aren’t a lot of additional opportunities for people to move on even as top performers,” Stark said.

Bend Memorial Clinic
Marvin Lein, chief executive officer of Bend Memorial Clinic, says the privately-held company has not seen a significant decrease in patient volume since last October because BMC provides services for customers at the entry point to the health care system, when patients are first getting treatment for an illness or ailment.

“We probably haven’t seen the kind of dip a hospital sees because we are at the entry point and by the time a patient reaches the point of care at a hospital a number of decisions have already been made,” Lein said. “At the same time we are not seeing the same kind of growth we saw two or three years ago. We remain as of the end of May squarely on target with our budget and our budget was not significantly modified from last year.”

Lein added that typically in a recession patients will delay physician-related services to the point where they need to have two or three issues addressed in a single visit, and will then seek the most cost effective service possible, which tends to be urgent and primary care.

BMC Chief Operating Officer Randal Avolio said the health care company added “a number of new programs in the last year, or will be added, that will offer new employment opportunities,” including increased referral center services, allergy care, the addition of an in-house dispensing pharmacy and the re-launch of rheumatology services toward the end of the summer. Currently, BMC has about 500 employees.

Lien said that, similar to the approach taken by the St. Charles Medical Center to increase internal communication with employees to keep morale boosted, BMC is doing everything it can to keep staff informed of its financial situation.

“That in itself – being able to know what’s going on – is something our staff values tremendously,” he said. “When we’ve needed to shift positions around we’ve tried to be very clear with each department so that our employees don’t feel like things are happening to them but rather that they are participating in a dynamic organization. We have excellent team spirit in each department, and team members are very close. They understand that in order for us as an organization to continue to offer them solid employment it takes all of us together supplying a product and service that our customers, our patients, need.”

Bend-La Pine Public Schools
Superintendent Ron Wilkenson has worked for Bend-La Pine Public Schools for 11 years. This is his first year in the top position running Central Oregon’s second-largest employer with about 1,700 workers. Wilkenson said the school district has not seen a decline in business since the economy tanked back in October, but it has had to deal with massive budget cuts – and that he’s never experienced anything like this throughout his career.

“That’s where we are a little different from most businesses that have been fighting a downturn in business and revenue during this recession,” he said. “Our enrollment numbers are the same, so the service level we have to meet has not changed, but we are dealing with a $10 million budget cut. We are at the mercy of the Legislature in terms of funding.”

Bend-La Pine Public Schools just faced a mid-year reduction of $3.5 million to its current budget, and is struggling to maintain its current level of service next year with about $10 million less to spend. Rather than a mass layoff of teachers – 65 positions have been eliminated this year, 45 of them teachers – or reducing the number of days students are in school, like what happened in Redmond, the district made reductions across the board in terms of supplies and materials, and opted not to fill open positions. It also sought concessions in cost of living increases for employees, and was able to get those approved with help from the teacher’s union.

Wilkenson said Bend-La Pine Public Schools is taking a new approach to purchasing supplies and equipment.

“The centralized purchasing office for the district works to find best buys and best shipping rates,” Wilkenson said. “In some cases that means tagging on to purchasing contracts with bigger entities on the west side of the mountains, and with King County schools in Washington. We’ve also reduced the purchase of supplies and materials by 25 percent. It’s hard to say exactly how that translates into what’s used in classrooms because that’s a dollar allocation that goes building by building. Honestly, what it means is teachers are picking up more expenses out of their own pocket. My wife is a teacher and she probably spends $2,000 a year on supplies.”

Despite all of these setbacks, Wilkenson said overall employee morale remains good.

“It probably hit a low point when we were having cost of living decrease discussions with employees, but in every case, every school I visit more than one employee has come to me and said ‘We just appreciate where we are,’” he said. “We work hard on internal communication with employees to let them know what we are dealing with and why we are making the reductions we are making, so it’s not just like this is something management is doing to them. We are working hard to come out on the other side of the recession together.”

Stark, manager of Redmond Economic Development, said the “we’re all in this together” attitude is common among the area’s largest employers.

“Most employees remain supportive of their company’s challenges and are buying into the needs and direction of their employers,” he said.

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