Lancaster General Health workers are getting a 4% pay raise, nearly two weeks after colleagues saw layoffs.
“Eligible” employees will receive raises effective May 28, the CEO of parent LG Health announced Tuesday morning.
LG Health and its parent company, Penn Medicine, did not respond to questions about the announcement, including how they define a “qualified” employee and how many employees there are. Two LG Health employees shared emails with LNP LancasterOnline, who are not being named because they fear their continued employment if their identities are made public.
Prune, then raise
LG Health announced the layoffs on March 29, which included 18 behavioral intervention managers and coordinators, about half of that team. LG Health also ditched its overnight behavioral intervention change. LG Health wouldn’t give the exact number of laid off workers under 65 or say how much the layoffs would save on annual costs.
LG Health’s parent, Penn Medicine, was also cutting.
The changes coming to Penn Medicine were reported in March by the Fierce Healthcare website and the Philadelphia Business Journal.
The system was seeking $40 million in annual cost savings by eliminating an undisclosed number of administrative positions, the Business Journal reported that CEO Kevin Mahoney wrote to academic system employees earlier this month.
The increase was disclosed to employees in an email Tuesday from Kevin Mahoney, CEO of Penn Medicine, the parent of LG Health and Lancaster General Hospital. Penn Medicine is also known as the University of Pennsylvania Health System (UPHS).
“Amid unprecedented economic challenges in our field, we continue to invest in our team,” Mahoney wrote. “The ability to provide this increase is a testament to the incredible contributions of UPHS staff.”
Philadelphia-based Penn Medicine employs more than 46,000 employees, including 9,700 at LG Health. LG Health is Lancaster County’s top employer.
According to the email, the 4% increase will be applied to base pay. In fiscal 2022, LG Health reported $700 million in salaries and wages and an additional $180 million in benefits. In fiscal 2022, LG Health About $1.5 billion has been posted Net patient service revenue, according to a financial report compiled by Penn Medicine.
Financial questions arise
As of June 2022, According to the most recent Penn Medicine financial records Available, long-term debt of LG Health is approximately $360 million. Disclosures to bond investors show that excess revenue from operations falls by $60 million between 2021 and 2022. In 2021, LGH posted additional revenue of $99.6 million, and in 2022 it posted $30.3 million.
LG Health CEO John J. Herman wrote in an email to employees that the March layoffs are part of LG Health’s “larger efficiency” move. Herman also cited financial pressures in previous memos including the decision to withdraw the annual holiday gift, which was expected to save $230,000.
Herman said in the layoff announcement that not filling “unnecessary” vacancies is one of the strategies the health system is using to increase its operating margins. LG Health has not responded to LNP|LancasterOnline about how many and which positions are being unfilled.
In his memo, Herman described the cost-savings of reducing the use of agency labor and overtime. He said this is being done to better align staff with lower patient demand since the pandemic emerged. LG Health did not list the cost savings.
Harman said in a March email announcing the layoffs that LG Health also reduced supply costs, increased revenue through integrated non-clinical administrative services and program expansion, and improved access to existing services.
Herman also rankled many employees in December, when he announced there would be no holiday bonuses for the year. LGH did not respond to questions about how much the move saved but based on staff information about the typical amount of gifts, the LNP estimated the cut would save about $230,000.
In addition to LGH, LG Health has more than 300 primary-care and specialty physicians; outpatient and urgent care services; and four hospitals with a total of 786 licensed beds: LGH, Women’s and Children’s Hospital, Lancaster Rehabilitation Hospital and Lancaster Behavioral Health Hospital.
LGH is the second-largest hospital by licensed beds and assets in the six-hospital Penn Medicine system.
Spending on infrastructure
LG Health’s cuts come even as the system commits to spending tens of millions on infrastructure and service upgrades. The health system maintains that the expansion immediately contributed to the hospital’s financial health.
Last fall, the health system moved LGH’s emergency entrance from Lime Street to North Duke Street in downtown Lancaster, a major milestone in a multi-year, $182 million expansion and renovation of the hospital’s emergency department. When the project is completed in the summer of 2024, the capacity of the hospital’s emergency department will nearly double, giving it 95 beds and the ability to handle 140,000 patient visits annually.
And in August, LG Health unveiled a $50 million proton therapy center at the Ann B. Barshinger Cancer Institute at 2102 Harrisburg Pike in East Hempfield Township. The other, operated by Penn Medicine in Philadelphia, is only the second such advanced cancer treatment facility in Pennsylvania.