Kaiser Permanente to slash 1,200 jobs in California

Oakland-based Kaiser Permanente is cutting 1,200 jobs as it continues to struggle with enrollment losses and the tough economic environment, senior officials said Tuesday.

The layoffs affect “just under” 2 percent of Kaiser’s overall workforce, and about one-third of the jobs eliminated were described as involving “temporary, on-call or short-hour employees,” according to an Aug. 11 statement by Gay Westfall, Kaiser’s senior vice president for human resources. She said most medical centers have positions that were eliminated, without providing specifics.

As a result of economic pressures, she said, Kaiser has “lost members, experienced lower patient volumes, and seen a slowing revenue trend that is expected to continue into next year.”

Marc Brown, a Northern California spokesman for Kaiser, said all of the jobs are covered by Kaiser's Labor Management Partnership with the Service Employees International Union and several others (but not including the powerful California Nurses Association). Primary job classifications that are being affected include housekeeping, pharmacy technicians and clerks, unit assistants, transcription/medical secretaries, health information management clerks and local business offices.

However, Dave Regan, the Oakland-based trustee for SEIU's United Healthcare Workers West local, insisted in a statement Tuesday afternoon that his union has an agreement with Kaiser that prevents its members from being included in the layoffs. It represents about 50,000 Kaiser workers in the state.

"We don't think it's necessary to eliminate any positions, given Kaiser's strong financial performance this year," Regan said. "Given that performance, we are disappointed that Kaiser saw fit to send out notices to individual employees notifying them that their positions were being cut. This will unnecessarily alarm those individuals, even though we have negotiated strong options to avoid actual layoffs."

The new round of cuts comes after several earlier rounds that cumulatively resulted in about 900 jobs being eliminated in Kaiser’s national facilities services unit, various data centers, and its information-technology unit, which recently completed the bulk of a multi-year estimated $6 billion electronic medical record installation in Kaiser outpatient clinics and hospitals. Some hospitals in Northern California are yet to be fully wired, however.

Westfall said the cuts reflect “the difficult economy and an uncertain industry environment, including lower Medicare reimbursement rates and changes related to health care reform.”

Along with reducing the size of its non-physician workforce, Kaiser has also deferred merit salary increases for non-unionized employees; adjusted timelines for capital spending projects; reduced the number of full-time employees through attrition and other means, and laid off non-union workers, Westfall said. She noted that some workers affected by the cuts may be able to find other jobs within the sprawling system, which had about 167,300 non-physician employees and 14,600 doctors before the recent cuts, according to its web site.

Total enrollment in Kaiser’s health plan dipped by nearly 36,000 members, remaining at about 8.6 million, over 2009’s first six months, officials announced last week.

Despite that decline in enrollment, Kaiser’s nonprofit health plan, hospitals and affiliated subsidiaries nearly doubled last year’s first half net income figures in results reported late last week, boosting its profits to more than $1 billion.

Net income for 2009’s first half was $1.1 billion, compared with $601 million in 2008. Operating revenue for the period was up about 4 percent to $21.1 billion, Oakland-based Kaiser said. Operating revenue was flat at about $1 billion.

For the second quarter, ending June 30, operating revenue jumped 3.9 percent to $10.5 billion, compared with the year-earlier quarter, but operating income slipped nearly 18 percent from $499 million to $411 million, Kaiser said.

Kaiser’s results were bolstered by a second-quarter jump in non-operating income, as Wall Street recovered from the first quarter’s steep decline.

It posted $209 million in non-operating income for the quarter ending June 30, and had $620 million in net income for Q2, a big jump from 2008’s $351 million Q2 net income. For the first half, however, investment income was just $15 million -- a tiny profit eked out from Wall Street in tough times, but far better than 2008’s first-half loss of $443 million on investments.

Late last month, Kaiser confirmed it is laying off 25 employees in its Oakland-based national facilities services unit, and that Christine Malcolm had resigned as senior vice president of the unit. That came on top of about 70 jobs cut in April and hundreds more earlier in the spring.

In April, Kaiser said it was cutting 70 non-clinical jobs in Northern California due to declining enrollment, and had cancelled 3,000 posted job openings since October. In March, it announced 850 job cuts, due to a $500 million outsourcing deal with IBM and other factors, with 700 cuts coming in Kaiser data centers and 160 from a realignment of its IT workforce.