Official: Layoffs unrelated to recent Knapp sale - Brownsville Herald: Valley

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Official: Layoffs unrelated to recent Knapp sale

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Posted: Saturday, February 9, 2013 9:35 pm

WESLACO — Knapp Medical Center confirmed Friday fewer than 50 employees were laid off, an apparent result of financial shortfalls.

California-based corporation Prime Healthcare bought the non-profit hospital last month, obtaining a controlling interest and committing to investing millions in improvements and funding a foundation. The layoffs that came down Thursday were not a result of the deal, said Dinah Gonzalez, KMC interim administrator and chief financial officer.

The layoffs came a day after comments about the hospital’s lack of profitability from Prime Healthcare’s CEO to Knapp employees went public on a California-based investigative reporting website.

A decrease in certain patient revenue streams led to the decision, but the impact on direct patient care would be limited, Gonzalez said in a statement.

“Did we do this because of the transaction on January 1?” she said in a telephone interview. “The answer to that is no.”

Those affected by the reduction in force were mostly in management or support staff, the hospital said. An exact number could not be cited at press time because several employees who met the qualifications for other positions stepped into those jobs, Gonzalez said.

“It gave us an opportunity in a couple of cases where positions here can now be handled either by our affiliation now, being part of a corporation, and/or being able to share staff with Harlingen Medical Center,” she said. Prime also owns Harlingen Medical Center.

“The reduction in force (was) positions, not people,” Gonzalez said.

On Friday, Prime Healthcare spokesman Edward Barrera referred all questions to Knapp.

“This is decision by the CEO and the administration,” he said.

Last month, in comments to The Monitor, Barrera said he believed hospital staff and executives would remain in place. Meanwhile, Knapp leaders said no immediate changes were expected, according to Monitor archives.

Specifically, in its statement released Friday, Knapp cited reduced revenue caused by payment reductions from Medicaid and Medicare as well as “the loss of volume to competing hospitals in the Rio Grande Valley.”

Prime’s CEO Prem Reddy said Knapp isn’t profitable and loses a few million dollars a year, in comments published by the non-profit investigative reporting outlet California Watch this week.

In response, Prime told The Monitor accusations lodged against the corporation, which include manipulation of the Medicare payout system, were rooted in conflict with the Service Employees International Union.

The past two years also saw two failed efforts to sell Knapp, pitting different factions at odds. While hospital leaders tried to find a larger system to incorporate Knapp, concerned physicians and community members thwarted efforts to sell it.

The Weslaco Health Facilities Development Corp., which formed to help Knapp acquire bonds via the city, filed a lawsuit challenging the sale of the non-profit hospital following the deal last month. City officials have said they are seeking documentation of the hospital’s ownership and bond status.

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