By Tara Bannow

The Bulletin

Leaders with St. Charles Health System announced Wednesday that they are eliminating two top administrative positions with more to follow as part of a restructuring designed to save more than $2 million next year.

Jay Henry, chief executive officer of St. Charles Bend, and Kirk Schueler, St. Charles’ chief administrative officer, will leave effective Jan. 3, and their positions will be eliminated, said Karen Shepard, St. Charles’ chief financial officer.

The changes are part of a restructuring that’s become necessary following increased costs and decreased reimbursement to the hospitals, Shepard said.

St. Charles needs to reduce its expenses by about $5.2 million overall to meet its 2014 budget goals, and the elimination of Henry’s and Schueler’s positions as well as that of additional management positions in the future is expected to cover $2.4 million of that, said St. Charles spokeswoman Lisa Goodman.

Leaders are still deciding how many additional positions will be cut and when that will happen, Goodman said.

“All I can say is (it will be in) management and leadership,” she said. “It’s still being determined.”

Instead of St. Charles’ current system of having three CEOs oversee its four hospitals — Bend, Redmond, Madras and Pioneer Memorial Hospital in Prineville — it will have two CEOs who will each oversee two hospitals, Shepard said.

“We’re trying to be more systematized, more as a health system and not individual sites, so that we do the best thing for the patients in the system,” Shepard said.

Bob Gomes, previously the CEO of Pioneer Memorial Hospital and St. Charles Redmond, will now serve as CEO of St. Charles Bend and Redmond, effective immediately.

Jeanie Gentry, who has served as CEO of St. Charles Madras, is now CEO of both St. Charles Madras and Pioneer Memorial.

Schueler’s departure was voluntary, Shepard said. She declined to say whether Henry’s departure was voluntary but said that leaders first decided to eliminate the Bend CEO position and then decided Henry wasn’t the best fit for the new CEO position.

Henry, who has been with St. Charles since 2009, made $286,132 in 2012 and took in another $70,841 in other compensation from St. Charles and related organizations, according to St. Charles tax filings. Schueler made $275,097 and took in another $69,873 in other compensation.

Goodman declined to say whether Henry or Schueler will receive severance packages.

Schueler, who has been with St. Charles for just under three years, said that when he and his colleagues were tasked with evaluating how they could cut costs, he realized other positions were essential but that his could go.

“These directors can report to other people,’” he said. “There is the loss of what I bring to the organization — that’s going away — but the organization needs to make some sacrifices to achieve those goals, and I was able to kind of reconcile all of that in my mind and basically make that recommendation to our CEO.”

St. Charles Health System President and CEO Jim Diegel’s position was unaffected by the changes.

Schueler, who said he will be involved in local development work once he leaves St. Charles, said the efficiencies created through the restructuring will put St. Charles in line with its 2014 budget. While the changes are difficult, he said, they allow the hospital system to accomplish its goals of remaining focused on patient care.

Goodman stressed that the cuts are coming from the top so that they won’t affect front-line caregivers’ jobs.

“We’re really trying to minimize the impact on patient care, and it’s very important to the leadership of the organization to look elsewhere to make these cuts,” she said.

St. Charles’ budget woes are the result of a changing patient population, Goodman said. Commercial insurance plans reimburse the most for care, but commercial reimbursement was down 1.5 percent last year, she said. Meanwhile, reimbursement for Medicaid, known here as the Oregon Health Plan, increased 1 percent, and reimbursement for Medicare increased by 0.5 percent, she said.

Due to the Medicaid expansion under the federal Affordable Care Act, St. Charles expects an additional 10,000 enrollees in Deschutes, Jefferson and Crook counties over the next two years, Goodman said.

The Medicaid program typically reimburses 20 cents for every dollar the health system spends on care, Shepard said.

“Some of it we felt already this year, so we’re kind of catching up on that,” she said, “and it’s going to continue to get worse.”

St. Charles made $30 million in revenue over expenses in 2012, up from nearly $18 million in 2011, according to tax documents.

“2011 had somewhat of a dip; ’12 was better and ’13 has been below budget, so that’s an issue,” she said.

— Reporter: 541-383-0304,