Luis tables 8 percent salary cuts indefinitely
Published: February 6, 2014
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ST. CROIX - Although Luis Hospital officials in late November publicly announced that 8 percent salary cuts would be re-implemented for all staff as a cost-cutting measure with the first paycheck in December, the deduction never occurred.
Instead, the salary cuts have been tabled indefinitely, hospital officials told The Daily News.
"We just had too many challenges to implement it," Luis Hospital Interim Chief Executive Officer Dr. Kendall Griffith said Tuesday.
On Nov. 29, Griffith fired 15 employees, including his senior financial management team, and announced that an 8 percent salary reduction would be implemented for all hospital employees beginning with the next government paycheck in December.
It was the third round of layoffs at the hospital in two years.
At the time, Griffith said the firings were expected to save $1.3 million annually and the 8 percent salary reduction would save the hospital an additional $3.2 million annually - although he said the intent was to re-evaluate the salary reduction after six months. The plan he announced in November was to use about half the savings to hire clinical staff and to use the other half to buy needed medication and supplies.
At that time, Griffith said he felt the moves were necessary because the hospital was in a fiscal crisis and a quality crisis - and he felt that hard decisions had to be made to keep the hospital open.
In January, Griffith told The Daily News the pay cuts had not yet been implemented because officials did not want to do so during the holidays. Unions also had contacted hospital officials with requests to sit down and talk about the proposed salary cut, he said.
On Tuesday, he said that the planned salary cut just was not working out.
Hospital legal counsel Royette Russell said hospital officials, including herself and representatives from the Human Resources Department, had met with union representatives.
The unions were strongly opposed to the cuts and would not agree to them, she said.
"We just thought it best not to tackle that right now," Griffith said. "We've tried to cut costs as much as we can."
The hospital has been relying on regularly getting advances on its appropriation from the Central Government, tapping into the money early to make payroll.
Officials said the hospital did not require an advance to make payroll this week, but they expect to need an advance from the Central Government to cover the next payroll in two weeks.
Griffith said he has reconsidered the whole idea of the pay cuts.
"When you look at what can be saved in relation to the harm that can be done as far as the staff morale, it may not be worth it," he said.
All government employees underwent 8 percent salary cuts in 2011 as the government attempted to close a budget gap. The 8 percent taken from their salaries in 2011 was restored in July 2013.
The territory's hospitals have two major sources of revenue: income from operations and appropriations from the government.
Luis Hospital has been in a financial crisis for some time now, with hospital officials pleading for years with politicians for a cash infusion.
Although local politicians have said for months that they are looking to find more money in the government's budget for the hospital, so far, no additional appropriations have been forthcoming.
Two weeks ago, the governor's financial team announced that the territory is headed toward a $70.5 million budget deficit by the end of the fiscal year and it will be up to the Legislature to close the projected budget gap.
As Luis Hospital struggles for fiscal stability, Luis Hospital Interim Chief Financial Officer Nellon Bowry told the territorial hospital board Tuesday that the abrupt departure of the hospital's senior financial management team has created a challenge when it comes to trying to reconcile the hospital's financial statements.
He was unable to provide the board with an accurate, comprehensive assessment of the hospital's financial status because the last financials that were reconciled were for September, he said. He has hired a controller to work on that, he said.
Bowry also told the board the hospital's accounts payable balance now amounts to $51.9 million, with some of the overdue payments stretching back as far as 2010.
- Contact Joy Blackburn at 714-9145 or email firstname.lastname@example.org.