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Intermountain Healthcare employees brace for more job cuts as Utah's largest employer readies to 'adapt or die'

SALT LAKE CITY — Weeks after the state's largest employer announced that 2,300 jobs would be outsourced, other employees at Intermountain Healthcare are unsettled by news their departments will soon be "realigned," which means more job losses are coming.

Executives say announcements this Thursday will bring clarity and a period of stability as Intermountain, the state's largest healthcare provider, positions itself for a sea change in the healthcare industry.

CEO Marc Harrison told the Deseret News further job losses will constitute “an extremely small percentage of our overall work force.” By being proactive, he said, Intermountain can avoid the “trauma surgery” taking place in other healthcare systems, where layoffs abound. No clinical staff — doctors, nurses, techs — will lose their jobs.

But Harrison acknowledged that the disruption has been “very big for each of the people who’s affected” at Intermountain, which in late January announced billing employees would go to work for a for-profit company with a checkered past.

The Deseret News spoke with 15 current or former Intermountain employees, ranging from hourly part-timers to managers to one former executive who said he took another job after feeling that Intermountain had strayed from its guiding principles.

All reported low morale as employees brace for changes that they claim are unnecessary amid low costs, high quality and balanced books.

“There was always a high level of trust and mutual respect amongst employees and management, and that has been destroyed,” the former executive said.

Intermountain Medical Center in Murray is pictured on Thursday, March 15, 2018.
Intermountain Medical Center in Murray is pictured on Thursday, March 15, 2018.
Spenser Heaps, Deseret News

Others say the future for Intermountain employees would be worse if the company remains stagnant as nontraditional players like Amazon and Google enter the market, and as insurers move toward a payment model that rewards providers for reducing hospital visits and treatments.

“Anyone in a large healthcare system is dealing with a set of forces that go way beyond the borders of their system or their state, and we are not immune from this,” said former Utah governor and Health and Human Services Secretary Mike Leavitt, who consults with large hospital systems around the country, including Intermountain. “At this point, it’s adapt or die.”

What’s next?

The specifics of Intermountain’s plan are not yet publicly available, but the Deseret News has learned the cost cutting will affect a broad range of departments.

Departments expecting to make adjustments include construction, facilities management, compliance, security, human resources and pharmacy services, according to internal communications.

More than 40 internal “work teams” have spent recent months proposing structural changes , said Harrison, who became CEO in fall 2016.

Harrison said he couldn’t speak to precise benchmarks and that he doesn't know how many employees will lose their jobs.

Reorganization began in earnest late last year, when Intermountain undid its region-based administrative structure and replaced it with a centralized structure, eliminating an unannounced number of jobs.

Then, in late January, Intermountain announced the outsourcing of billing to Chicago-based R1 RCM.

Two other employees who spoke to the Deseret News described belt-tightening at their Wasatch Front hospitals. At one, graveyard CT and EKG technologist positions have recently been eliminated, meaning other employees have taken on those responsibilities.

Harrison said he has increased the focus on costs during his year-and-a-half at the helm but that such decisions are left to lower-level administrators. Patient experience is then closely tracked.

Harrison said he's looking forward to Thursday’s meeting and the conclusion of “the main phase of reorganization,” when his people will be “able to get comfortable again.”

Intermountain Medical Center in Murray is pictured on Thursday, March 15, 2018.
Intermountain Medical Center in Murray is pictured on Thursday, March 15, 2018.
Spenser Heaps, Deseret News

A matter of perspective

Formerly known as Accretive Health, R1 is known outside the medical field for a series of lawsuits that made national headlines. Most notably, in 2012, R1 was sued by Minnesota’s attorney general and barred from doing business in the state after it was accused of losing an unencrypted laptop with patient data and of overly aggressive collection tactics.

R1 has denied the claims and since changed its name and leadership. And some Intermountain employees have praised R1 representatives for being transparent and accommodating during the transition, which will take place April 8.

As of last Friday, 94 percent of billing employees had accepted their offers. Three percent had declined to continue their employment with R1, and 3 percent had yet to respond.

But those employees have not only grappled with the transition from a nonprofit to a for-profit mission, but also with reduced benefits (R1 doesn't offer a pension, for example). Some only signed on a condition that they will eventually be relocated to Intermountain’s Lake Point billing office in West Valley. And for many of them, that's impossible. One in St. George said that of 45 employees there given a Sept. 1 deadline to move, only two were known to be actively considering it.

Some also expressed doubts about their long-term prospects at R1, which has locations in India that already deal with insurers on Intermountain balances below $500. Employees from an India office recently observed St. George employees for two to three days, leading them to wonder if they are training their eventual replacements.

Harrison and Intermountain board chairman Scott Anderson said they empathize with those affected, but that the deal not only secured jobs for those 2,300 employees, but also caused R1 to renew a 2011 pledge to bring more jobs to the state for an “innovation and development center” in Salt Lake City.

Valerie Quintana-Miller, who works in the Lake Park office, said she was stunned by the late-January news, but relieved she kept her job, and that she bought stock in R1.

As the manager of eligibility counseling in Logan Regional and at McKay-Dee hospitals, Amy Thomas said that R1’s past may not be squeaky clean, but that the industry is changing and Intermountain must change with it to stay competitive and financially viable.

If not for R1, Harrison said he would have eventually laid off “hundreds, if not a thousand people” due to automation of their jobs. He said they settled on the April 8 switchover date to allow Intermountain employees to complete their annual raise process and move to R1 at the highest possible pay rate.

His peers at other healthcare systems, Harrison said, “can’t believe that we’ve actually gone to these lengths. It’s essentially unheard of. And I’m not asking for people to, like, clap me on the back for that. It’s just the right thing to do.”

‘Storm clouds’

Harrison has characterized the Intermountain job as a homecoming, a return to the healthcare system where he decades earlier completed his residency and fellowship to work in pediatric critical care.

But he very quickly made it known after succeeding Charles Sorenson as CEO in 2016 that he wouldn’t settle for business as usual. Last year, he told an interviewer at Advisory Board, a self-described healthcare "best practices firm," that he had unnerved some high-ranking subordinates when he likened Intermountain to a “horseless carriage” that was “building our own wheels” and “stitching our own upholstery."

Intermountain Medical Center in Murray is pictured on Thursday, March 15, 2018.
Intermountain Medical Center in Murray is pictured on Thursday, March 15, 2018.
Spenser Heaps, Deseret News

It would need to become a “Tesla,” he told Advisory Board, “where Tesla is the concept … but the battery, the tires, the wheels — everything is subbed out to be as fast and nimble and as cost-effective for the consumers as possible.”

But Harrison told the Deseret News last week that he’s not at Intermountain to alter its community mission or reduce its ranks.

“I’ve had people say to me, ‘Marc, are you, like, a turnaround guy?’ No, I’m a doctor who cares about patients who happens to be a leader, also.”

While employees have speculated that Harrison is unusually well compensated for a nonprofit CEO, Harrison said he has “never in my life” negotiated his salary and that he simply asked the board for a “fair” amount. He was paid $1.6 million in 2017, according to Intermountain spokesman Daron Cowley, a number that Anderson said reflects a median paid to executives at comparable organizations. Sorenson received $2.15 million in 2016, according to public tax documents.

Harrison said his concerns are “storm clouds on the horizon” for healthcare systems, showing a short series of slides he'd cued up on a nearby monitor at his office on the 21st floor the Key Bank Building in downtown Salt Lake City.

From January to July 2017, one read, 72 healthcare companies announced layoffs. Already in 2018, four large healthcare organizations have done the same.

Another slide showed “11 Days That Shook Healthcare in 2018 (so far),” most publicized among them a Jan. 30 announcement from Amazon, Berkshire Hathaway and JP Morgan that they would form an independent healthcare company to serve their U.S. employees. Other recent health industry invaders include Microsoft and Google, Apple and Uber.

“I can guarantee you, they’re not going to build a single hospital,” Harrison said. “.. All of these folks, they’re going to come together and they’re going to try to provide the primary care and leave the really expensive stuff to the legacy systems. I’m trying to help us change to get to a place where we can provide that new model of light primary care and still be able to provide the spectacular high-end care that we currently do.”

Some of those affected by Intermountain's recent changes wondered if it really needed to make the type of drastic changes seen elsewhere, given Intermountain’s growing revenues — up 14 percent from 2015 to nearly $7 billion in 2016 — and Utah’s lowest-in-the-nation per capita healthcare costs.

But even as revenues increased between 2015 and 2016, Intermountain saw the cost of medical services and supplies increase by nearly 16 percent, and it applied nearly $500 million toward “future needs,” up from $280 million a year prior.

“It’s not just about Intermountain, and it’s not just about Utah, it’s about the United States, and the fact that we spend almost 20 percent of our economy on healthcare," Leavitt said.

Earlier this year, Intermountain declared that it would combat skyrocketing drug costs by joining with other hospital systems to make its own generic drugs.

Leavitt said Intermountain is also a national leader in the move away from a traditional fee-for-service payment system, where hospitals are paid for the amount of services they provide.

Newer "value-based" payments are based on outcomes, not services. If insurers pay a flat rate to treat a patient with a chronic health condition, the onus shifts to Intermountain to provide the best care at the lowest possible cost. It also makes it more worthwhile for Intermountain to engage in preventative care, and to provide lower-cost services over the phone or internet. Insurance companies, patients and taxpayers all win. But such drastic innovations aren't cheap, or easy.

“They’re basically trying to remodel an airplane while in flight," Leavitt said.

Regrets? One, at least.

To Harrison and Anderson, Intermountain's reorganization is just the latest in a long series of bold changes by the system's leaders. It previously bucked convention when it unveiled its own health plan (SelectHealth), and when it formed a physician group, and when it centralized supply.

“We’ve heard people say, ‘Oh, are you going to prepare to sell Intermountain?’” Harrison said. “Absolutely, one hundred thousand million percent, no.”

Anderson said he's heard from legislators, doctors and administrators who are concerned, but "my point to them is that the mission isn't changing." He's had to assure people that recent actions have had the board’s blessing, and benefited from its guidance.

Neither Harrison nor Anderson disputed the blow to morale described by employees to the Deseret News. Intermountain was named the 25th-best large employer by Forbes in 2015. In 2016, it ranked 95th. In 2017, it wasn’t ranked among the nation’s top 500. Its rating on the employer review site Glassdoor has plummeted from 3.8 stars in late 2017 to 3.3 stars today, with 42 percent of respondents approving of Harrison.

Harrison said his most profound regret is that he was “really gentle about sharing too much of the ‘why’ up front, because we didn’t want to be scary to people.”

He has since met face-to-face with many of the affected employees and plans to conduct an employee engagement survey once the reorganization is complete.

In Thursday’s daily 10 a.m. “rollup” meeting, where Harrison hears about safety and quality concerns across the system’s 22 hospitals and 185 clinics, he appended a short sentiment to his closing thoughts. They didn't need to be nervous about March 22, he said.

“The work has largely been done, and this is an opportunity to bring people together and share what the vision looks like, so people can settle down and get to work.”