Why Is a Wealthy, Profitable Nonprofit Laying Off Employees?

July 11, 2013

“Tulsa’s St. John Health System is ‘restructuring its workforce’ because of changes in medical financing, including Gov. Mary Fallin’s decision not to allow Medicaid expansion in the state,” the Tulsa World recently reported.

“A message from St. John President and CEO David Pynn to hospital employees specifies that ‘over the next three weeks, we will implement a plan to strategically restructure the workforce, resulting in position eliminations of approximately 2 to 3 percent of our associates by the end of June.’”

If Obamacare is now coming back to bite hospitals that pushed for the law in the first place, hospitals have no one to blame but themselves (see Michael Cannon’s article on the following page).

But is Gov. Fallin’s decision not to expand Medicaid really the reason for the layoffs at St. John’s? Nationwide, the number-one reason hospitals, universities, retailers, and a host of other businesses are laying people off and reducing hours is Obamacare’s mandate for employers to provide “adequate” health insurance for employees who work 30 or more hours a week. I personally have spoken with nurses at Oklahoma hospitals who were told directly that their hours were being reduced and that other jobs were being eliminated to deal with the mandate to provide insurance coverage or face penalties. Everyone is facing this challenge; it is not unique to hospitals.

It’s interesting to note that St. John’s has more than $1 billion in assets. According to its most recent IRS filings, in the last two years its revenues have exceeded expenses by a total of $102.7 million.