Sacred Heart to lay off 8 psychiatric physicians in move to cut costs, change care model

Providence Sacred Heart Medical Center will lay off eight physicians caring for psychiatric patients in a move anticipated to save between $2 million and $4 million and help the hospital’s health care workers meet a need in the community beyond its doors.

“It’s a significant chunk,” said Dr. Daniel Getz, chief medical officer at Sacred Heart. “But what’s important to remember is that we’re adding back positions.

“A lot of what we’re doing is restructuring our current model of delivering behavioral health care.”

The eight physicians, who will remain with the hospital through March as that restructuring takes place, worked in the hospital but did not participate in a program training residents, Getz said. The positions that are hired back will be expected to work in all areas, including providing outpatient care.

Sacred Heart also plans to hire three advanced registered nurse practitioners to the staff that will serve psychiatric patients, Getz said. That mirrors a national trend reported in the journal Health Affairs in September, in which Harvard University researchers found that the number psychiatric mental health care nurse practitioners serving Medicare patients increased nationally by 162% between 2011 and 2019, while the number of psychiatrists decreased 6%.

“This wasn’t an easy decision,” Getz said. “But it was the decision we need. If we had built the model today, to serve the needs of the community, it wouldn’t resemble what we previously had in place.”

The physicians laid off will be able to apply for jobs following the restructuring, Getz said.

Getz acknowledged that Sacred Heart’s financial situation necessitated the decision. The hospital posted a $57 million loss in the first three months of 2022, the most recent quarter for which data is available from the Washington Department of Health, driven in large part by increased expenses during the pandemic and Medicaid reimbursement rates that have not kept up with rising health care costs.

Those problems are not unique to Sacred Heart. The Washington Hospital Association released the findings of a financial survey of the state’s health care facilities last week, with Washington hospitals reporting a $1.6 billion operating loss through the first nine months of 2022.

“Things are incredibly difficult right now,” said Susan Stacey, chief executive of the Providence Inland Northwest service area, which includes Spokane and Stevens counties, during a news conference announcing the findings on Dec. 12. “This is really the worst I’ve seen the state of the health care system in more than 35 years.”

The financial challenges are also coming in a year when Providence signed a $22.7 million settlement agreement to resolve a whistleblower complaint targeting two Walla Walla neurosurgeons, and reimbursement to hundreds of Medicaid patients who were billed for care as part of an “unintended error” revealed by the New York Times in September.

The money saved as part of the restructuring will be reinvested into other areas of the hospital to improve patient care, Getz said.

“This allows us to better spread our resources across the entire spectrum so that we don’t have to make difficult changes,” he said. The hospital has no plans to cut services at this time, he added.

The staffing changes also shouldn’t signal that the hospital intends to end its psychiatric services, Getz said, calling them an “imperative need.”

“We really have a broad footprint in Spokane, caring for that community,” he said, “and we’re committed to keeping that footprint. We just needed to find a way to fund it, as times are tight.”