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About two weeks after seeing coworkers laid off, Lancaster General Health workers are getting 4% pay increases.
“Eligible” employees will receive the increase effective May 28, the CEO of LG Health’s parent announced Tuesday morning.
LG Health and its parent organization, Penn Medicine, did not respond to any questions about the announcement, including how they define an “eligible” employee and how many of those workers there are. Two LG Health employees shared the email with LNP | LancasterOnline, which is not publishing their names as they fear for their continued employment if their identities were known publicly.
Layoffs, then raises
LG Health announced layoffs on March 29, which included 18 behavioral intervention managers and coordinators, about half of that team. LG Health also eliminated its overnight behavioral intervention shift. LG Health would not give the exact number of workers laid off beyond saying it was fewer than 65 or say how much the layoffs would save in expenses annually.
LG Health’s parent, Penn Medicine, was also cutting back.
Changes coming to Penn Medicine were reported in March by the Fierce Healthcare website and Philadelphia Business Journal.
The system was seeking savings of $40 million in annual costs by eliminating an undisclosed number of administrative positions, the Business Journal reported CEO Kevin Mahoney wrote to the academic system’s employees earlier this month.
The raise was revealed to employees in an email Tuesday from Kevin Mahoney, the CEO of Penn Medicine, the parent of LG Health and Lancaster General Hospital. Penn Medicine is also known as University of Pennsylvania Health System (UPHS).
“Amid the unprecedented economic challenges in our field, we continue investing in our team,” Mahoney wrote. “The ability to provide this increase is a testament to the incredible contributions of the UPHS workforce.”
Philadelphia-based Penn Medicine employs more than 46,000 employees, including 9,700 in LG Health. LG Health is the top employer in Lancaster County.
According to the email, the 4% increase would be applied to base salaries. In fiscal year 2022, LG Health reported $700 million in salaries and wages and an additional $180 million in benefits. In fiscal year 2022, LG Health posted roughly $1.5 billion in net patient service revenue, according to a financial report compiled by Penn Medicine.
Full impact of Penn Medicine Lancaster General Health cuts unclear
LG Health eliminates about 65 jobs [update]
LG Health cancels holiday employee gift
Financial questions loom
As of June 2022, according to the most recent Penn Medicine financial documents available, LG Health has a long-term debt of about $360 million. The disclosure to bond investors shows a steep $60 million drop in excess revenue over expenses from operations between 2021 and 2022. In 2021, LGH posted $99.6 million excess revenue, and in 2022 it posted $30.3 million.
LG Health CEO John J. Herman wrote in an email to workers that the March layoffs were part of LG Health’s move to “greater efficiency.” Herman also alluded to financial strain in previous memos including his decision to rescind the annual holiday gift, which was expected to save $230,000.
Herman said in the layoff announcement that not filling “non-essential” vacancies was one of the strategies the health system is using to increase its operating margin. LG Health did not respond to LNP|LancasterOnline’s question about how many and which positions are not being filled.
In his memo, Herman recounted cost-savings of reducing use of agency labor and overtime. He said that was being done to better align staffing with lower patient demand since emerging from the pandemic. LG Health has not listed the costs saved.
Herman said in the March email announcing the layoffs that LG Health had also reduced supply expenses, integrated nonclinical administrative services, and increased revenue through program expansion and improved access to existing services.
Herman also rankled many employees in December, when he announced there would be no holiday bonus for the year. LGH did not respond to questions about how much that move saved but based on information from employees about the typical amount of the gift, LNP estimated the cut would have saved about $230,000.
In addition to LGH, LG Health includes 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 & Babies 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 came even as the system committed to spending hundreds of millions in infrastructure and service upgrades. The health system maintains that the expansion has immediately contributed to the hospital’s financial health.
Last fall, the health system moved LGH’s emergency entrance from Lime Street back to North Duke Street in downtown Lancaster, which was a major milestone in the multi-year, $182 million expansion and renovation of the hospital’s emergency department. Once the project is completed in summer 2024, the hospital will have nearly doubled its emergency department capacity, giving it 95 beds and the ability to handle 140,000 patient visits annually.
And in August, LG Health unveiled the $50 million Proton Therapy Center at the Ann B. Barshinger Cancer Institute at 2102 Harrisburg Pike in East Hempfield Township. The facility would be just the second such advanced cancer treatment facility in Pennsylvania, with the other operated by Penn Medicine in Philadelphia.
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