Tough choices at Memorial Health

CEO Ed Curtis discusses recent ‘last resort’ layoffs and fiscal outlook

Illinois Times has learned Memorial Health's recently announced layoffs totaled about 300 – with 120 involving people in leadership positions – and that the cuts will save the Springfield-based health care system an estimated $40 million a year.

The new information, expanding on an earlier statement from the nonprofit system that said there were "several hundred" layoffs, came from Memorial Health's president and chief executive officer, Ed Curtis. He told Illinois Times in an interview that the cuts were part of "tough choices" to sustain the nonprofit system through an unprecedented nationwide staffing shortage that sent payroll costs soaring.

Curtis said the cuts, mostly to administrative and support positions and mostly avoiding frontline care staff, were a "last resort" after other cost-trimming measures. They were all needed to preserve core services and help return the system to "break-even" by fall 2024, he said.

"This is all pandemic-related," Curtis said in a phone interview with Illinois Times. "Health care was the first to be affected by the pandemic – obviously taking care of people – and we're the last industry to come out of it because of the labor impacts that are so daunting."

The COVID-19 pandemic, which first hit Illinois in March 2020, continues to affect Memorial Health, a five-hospital system with 500-bed Springfield Memorial as its flagship, because of the resulting staff burnout and reduced interest in jobs at hospitals and other health care centers needing skilled practitioners around the clock, Curtis said.

"There's just a shortage of people to provide care in these 24-hour, seven-day-a-week operations," he said. "Everybody in health care is faced with this same challenge."

The extra money that Memorial and other hospitals must pay for traveling nurses and other clinical staff and the higher pay they must provide to attract permanent employees for all shifts and departments has taken its toll, Curtis said.

Memorial Health has experienced a 40% increase in labor costs since August 2020, he said. That equates to about $250 million more in annual costs for the system, which posts $1.5 billion in annual revenues across sites that include hospitals in Springfield, Decatur, Jacksonville, Taylorville and Lincoln, he said.

Sixty-five percent of the system's revenue comes from Medicare and Medicaid, Curtis said, with the remainder coming from private insurance. "The reimbursements aren't keeping up with the cost of labor," he said.

Memorial Health experienced a record loss of $107 million on operations, and a total of $227 million when counting investment losses related to the downturn in the stock market, in the fiscal year that ended in September 2022.

The pace of losses is slowing through internal savings, higher reimbursements in some areas and by not filling some vacancies, Curtis said, allowing Memorial to save $174 million in the current fiscal year, which ends Sept. 30.

As of Aug. 1, and with two months remaining in the fiscal year, losses totaled $47 million, he said.

Memorial Health plans for $150 million more in savings in the fiscal year that begins Oct. 1, a total that includes the $40 million in personnel cuts – mostly among workers who don't touch patients, Curtis said.

The reductions, he said, will help the system afford the higher wages and inflation-related cost increases in utilities, pharmaceuticals and other supplies, and they should collectively enable Memorial Health to reach a break-even point by October 2024.

"Memorial has a mission, and we want to fulfill that mission in physical health and behavioral health," he said. "Even though we're going through these post-pandemic labor challenges, we want to be here for the communities of central Illinois, whether it's ambulatory care in our urgent-care centers or behavioral health and inpatient care."

Curtis said Memorial Health has "good cash reserves." But he said: "A sensible organization just can't eat into its cash reserves year after year. You're going to get yourself in trouble."

Hospital Sisters Health System, a 15-hospital system based near Riverton that operates HSHS St. John's as its flagship, reported a $93 million loss from July through December of 2022. When asked what financial challenges the system faces, spokesperson Jennifer Snopko replied with a statement that didn't specify any recent or expected cuts.

"All health systems across the country have to navigate many factors and headwinds in the current health care landscape," Snopko said. "HSHS is committed to delivering high-quality, Franciscan care to our patients and community, as has been our mission for nearly 150 years."

The U.S. health care industry, which includes hospitals and product manufacturers, has announced 48,865 job cuts in 2023 through August. That's an increase of 128% compared with the 21,292 cuts announced in the sector during the same period in 2022, according to Challenger, Gray & Christmas Inc., a global outplacement and business and executive coaching firm.

"Health care, particularly hospitals, are undergoing a lot of turmoil with staffing and trying to remain profitable while delivering high levels of care," Andy Challenger, a senior vice president at the firm, said in a statement.

"The pandemic stretched hospital resources and workers to the brink, and those staffing issues have not normalized in most hospitals," he said.

"Highly experienced workers burned out during those years, and those who remained were tasked with more work while less-trained ... staff filled the gap," Challenger said. "Nurses who had all the institutional knowledge were paid a fraction of what travel nurses made, causing friction and turnover, so hospitals had to increase wages to attract enough workers. These issues are compounded in more rural hospital systems that often have trouble attracting talent (and) turning profits while also giving the high level of care required."

Memorial Health's staff layoffs will reduce the system's salary and benefits costs by 5% and eliminate one in every five leadership positions, Curtis said.

The leaders who are departing include two – the chief transformation officer and chief nursing officer – who earn between $300,000 and $460,000 per year in base pay, bonuses and financial incentives, according to IRA 990 forms filed by the health system in 2022.

Curtis is the highest paid, scheduled to earn $1.38 million in fiscal 2023. Some social media posts by Memorial Health critics put his pay at almost $11 million annually. But Curtis said that figure, from the system's IRS 990 form for the fiscal year ending in September 2019, reflected a one-time payment of $9.4 million in deferred compensation that accumulated over a 30-year period.

The terminations were painful to make and more numerous than personnel cuts earlier in the pandemic, Curtis said.

"These are people's lives," he said. "I care about these people. I care about this community. But I also want to make sure we preserve the availability of care for all that need us.

"I'd rather get rid of leadership roles than cut services to the poor," he said.

He noted that the system took steps to help Decatur Memorial Hospital, a Memorial Health affiliate, boost services to accommodate pregnant people in Macon County – about half of them covered by Medicaid – when HSHS St. Mary's Hospital in Decatur closed its obstetrics unit this summer.

Illinois Times asked Curtis how Memorial Health justified the elimination of entrance attendants and valet parking and the clinical ethics center at Springfield Memorial Hospital and job cuts to the hospital's pastoral care department and the system's mental health affiliate.

"We had to look around the region and say what are the 'nice-to-haves,' maybe even 'more than nice to have' but something that other people aren't provided," Curtis said. "We've got to get back closer to the market.

"We had to make some tough choices, and we weren't going to cut direct-care providers," he said. "We weren't not going to cut important things. And as far as restoring any of these things – it's not going to be in the short term."

Entrance attendants

David Kissick provided a steady hand and a calming voice at the entrance to Springfield Memorial Hospital.

Kissick, 62, a retired state corrections officer, spent eight-and-a-half years helping patients avoid falling and hurting themselves as they entered, exited or were dropped off and waited at the entrance for caregivers to park vehicles.

He and about a dozen other entrance attendants also provided free valet service so Springfield Memorial patients and their families didn't have to walk to and from the outskirts of parking lots that fill quickly every morning on the sprawling campus just north of downtown Springfield.

"The people really appreciated it," said Kissick, an Athens resident who often began his weekdays at 4:30 a.m. "It was always a comfort to them that we were there to help."

Kissick and his coworkers were laid off without warning Aug. 7 as Memorial Health announced layoffs that Curtis said will total "about 300" after they are complete in September.

Elaine Boardman, 75, of Springfield said she appreciated the valet service because it allowed her to go to Springfield Memorial for medical services without having to depend on a member of her family to take off work and accompany her.

"I found it very convenient," Boardman said. "They were very nice, and I was able to keep my independence."

Memorial Health posted on its internal social media site that patients with mobility issues will need to bring a support person to help them exit their vehicle and park. Staff members in clinical units also may be called upon to come to the entrance and assist a patient, the posting said.

Boardman said she called Springfield Memorial and was told hundreds of people have complained about the elimination of the service. She said she checked with HSHS St. John's Hospital and confirmed that valet parking continues to be offered at the 422-bed hospital.

"I'll probably switch and go to St. John's for procedures," Boardman said.

Snopko said St. John's has free valet parking available to patients from 8 a.m. to 4:30 p.m. weekdays at the main lobby entrance and from 5 a.m. to 5 p.m. weekdays at entrances to St. John's Pavilion and Prairie Heart Institute.

Kissick said the number of cars he and his coworkers would park through the valet service each day would range from 120 to more than 200. Attendants walked between nine and 10 miles per day, he said. The service operated weekdays for years from 4:30 a.m. to 7 p.m.

Workers sometimes would use wheelchairs to get patients from their cars to their destination in the hospital when volunteers were unavailable, Kissick said.

"I really like helping people," Kissick said. "It was a great job. We actually became quite close with some of the patients."

Kissick, whose pay ranged from $12.50 per hour when he started to $18 per hour when he was dismissed, said the 40-hour-a-week job provided "fun money" for him but was the sole source of income for some attendants.

In the early phases of the COVID-19 pandemic, entrance attendants would help screen visitors for COVID symptoms and ensure everyone who entered was masked.

Kissick said some people refused to wear a mask – a proven method of reducing the spread of COVID but a step that some people considered a liberal fallacy – and had to be turned away at the entrance.

"I had two people threatening to kill me because they didn't want to put on a mask," he said. "One said, 'I'll come back later and cap your ass.'"

Kissick called the termination of entrance attendants "a big mistake."

Sara Lieber, director of Senior Sidekicks, which provides consulting services for caregivers and accompanies patients to medical visits, said her clients' loved ones could encounter more risk of falling and agitation without the attendants they depended upon.

"We have to not only think about what makes dollars but what makes sense," Lieber said.

Mental health services

A dozen people at Memorial Behavioral Health have lost or will lose their jobs. The cuts include the affiliate's president, Diana Knaebe, who didn't return phone calls and emails seeking comment.

Four of the 12 people being laid off are in leadership, according to a source associated with the affiliate who asked not to be identified. The cuts are coming at a time when the already-understaffed affiliate maintains waiting lists of six months to a year for therapy and case management services for low-income patients with chronic mental illness, the source said.

"The rhyme or reason wasn't explained," the source said. "It adds insult to injury. It's salt to our wounds."

However, Curtis said Memorial Health is "largely preserving" mental-health services and even expanding them in some cases.

He noted that Memorial Health and Southern Illinois University School of Medicine remain as the main providers of mental health services in the Springfield area. Memorial has a longstanding arrangement with School District 186 and works with Springfield police to provide services that reduce the risk of arrests and confrontations between law enforcement and people with mental illness.

Laying off the MBH leader "doesn't mean we don't care about providing direct services to behavioral health in the schools, in the doctor's clinics, in our ER and mental health centers and in the hospital," Curtis said. "We're everywhere."

When top administrators are eliminated at MBH and other divisions and affiliates, their duties will be reassigned and spread among those who remain, he said.

"Everybody's going to have to take on more responsibility," Curtis said. "We will have capable people leading, and we have a capable group of people leading behavioral health."

Clinical ethics center

Springfield Memorial's Clinical Ethics Center, which included two full-time ethicists and an administrator, closed with the layoff of the three staffers. The center was 32 years old, started in 1991 as one of the first of its kind in the country to provide ethical guidance to patients, families, nurses, doctors and other clinicians, according to George Agich, the founding ethicist. Medical journals say most hospitals have health care ethics programs today.

Also eliminated was the Springfield Memorial center's 20-plus-member board, which mostly consisted of Memorial employees and provided guidance on policy issues.

There was no justification given for the budgetary decision to eliminate the center, said Peter Wenz, a committee member and retired University of Illinois Springfield philosophy professor.

"It's hard for me to imagine that it's justified," he said. "This is a major loss to the institution, and it could be kept going through the employment of three people."

The ethicists helped patients, families and staff think through decisions that included end-of-life issues, treatment plans and whether, when and where it was appropriate to place patients after discharge, Wenz said.

"That's worth a lot, in terms of how the public feels the health system treated them," Wenz said. "A lot will be lost, I think, with the loss of the clinical ethics center."

Agich, 76, a former SIU faculty member with a doctorate in philosophy who now lives in Texas and runs medical ethics conferences around the world, said Curtis was a key supporter of the Memorial ethics center when it began.

"It must be a significant financial crisis for this to happen. I'm surprised," Agich said in a phone interview.

Curtis said clinical ethics discussions will continue to take place at Springfield Memorial with existing clinical staff, the same way nurses will continue to provide breastfeeding support to patients after two designated lactation consultants were laid off.

Other cuts

Memorial Home Medical Supply sent a memo to its customers saying that retail locations in Decatur, Lincoln and Jacksonville will close Sept. 8 and move all products to its Springfield store at 644 N. Second St.

But Curtis said customers still can order their supplies through Memorial.

"We will ship them directly to their home," he said. "We're just eliminating some storefront locations. But Memorial Home Medical Supply is going to be fully available and support all the consumers that need us throughout central Illinois. ... These are hard choices."

The layoffs included a half-dozen part-time pastoral care professionals who served patients and families on nights and weekends at Springfield Memorial. Two full-time chaplains remain, according to Don Peck, a Methodist minister who was one of the six workers laid off.

Peck, 76, who pastors a church in Loami, recalled consoling an emergency medical technician in his 20s in Springfield Memorial's emergency room after the EMT cared for and transported the mangled body of a car wreck victim who later died.

The loss of pastoral staff will be traumatic for some families, Peck said. "I enjoyed this work. ... We provided comfort care and hand-holding. Every shift, nurses and doctors would thank me for what I did."

Peck said he was acquainted with Curtis and is sure that the decision to reduce the pastoral care staff wasn't taken lightly.

"I have to think it hurt him emotionally that he had to do this," Peck said.

Curtis said Memorial Health, founded 126 years ago as a Lutheran-affiliated institution but now officially secular, is working to develop ways of providing pastoral care less expensively and more broadly.

"We're going to try to expand it to more spiritual care so that we can recognize all faiths and try to help everybody that has needs in the organization," he said. "I'm not pulling back on Christianity per se, but we have got to be a little bit more inclusive."

Departing employees will receive a severance package, health insurance stipend and support resources, Memorial Health officials said. Some workers may be offered the opportunity to transfer to different jobs within the organization, and so far, 45 people have done so, Curtis said.

The stress on employees affected by the layoffs is undeniable, he said, but Memorial Health must take a long-term view.

"This post-pandemic labor issue is real," he said. "We don't think it's smart to kick the can down the road and not address it. ... We're not going to close important clinical services that are needed for our community. That's what I want people to know. We're going to be there for them."

Dean Olsen is a senior staff writer at Illinois Times. He can be reached at [email protected], 217-679-7810 or