January 8, 2009
Media, PA – Congressman Joe Sestak (PA-07) released the following statement following the announcement by Crozer Chester Medical Center that they will need to lay off a number of employees: —
“Yesterday, I spoke with Crozer Keystone Health System CEO Joan Richards regarding their current financial challenges, which Ms. Richards attributed principally to the overall economic slowdown. She discussed the situation Crozer faces, including a decline in the purchase of elective medicine and procedures by prospective patients, reduced income and increased debt among patients, and less medical payment assistance, among other payment issues.
“Ms. Richards informed me that Crozer intends to introduce cost consolidation measures in order to avoid more dire financial circumstances, and these consolidations will lead to a near-term reduction in Crozer's workforce of which the final number is yet to be determined, but could be in the range of 400. She stated health services would not be impacted.
“We also spoke with the unions. At this very difficult time, it is critical that organized labor and management communicate in the most positive and productive way to see that the labor force, which is the heart of every good organization, does not bear a disproportionate cost of this severe recession. As decisions are made to reduce workforce and employee benefits, management has a moral responsibility to be certain that the cuts impact the minimum number of people and offer the continued benefits necessary to see that a period of temporary unemployment does not result in an economic catastrophe.
“Americans want to work. It is up to us to craft an economic stimulus plan that will put as many Americans back to work as soon as possible. Furthermore, this situation points to the crisis in our healthcare system that must be addressed to relieve the pressure on health care administrators and workers to do the impossible, which is to provide health care for the insured and uninsured, alike. The economic stimulus will be incomplete unless we also address the underlying problems associated with providing affordable, accessible and quality health care to hardworking Americans who deserve it.
“At this critical time as the nation is deciding how to invest stimulus funds, and as legislation to address all aspects of our financial markets is considered, we must be sure that resources are focused toward those organizations and entities that meet acceptable standards of transparency, accountability and fairness in dealing with their workforce.
“We are all in this recession together and we must remember that a values-based relationship between labor and management helped to forge the economic miracle of the United States of America.”
During the conversation, Ms. Richards also noted additional concerns, including the Pension Protection Act (PPA) rules that required pension plans to make large catch-up payments to meet 100 percent funding requirements by 2011. However, companies (such as Crozer) are facing decreased pension plan values due to the recent declines in the stock market and the reduced value of their plan assets. Under the PPA, they were required not only to continue on a time line to achieve 100 percent funding, but now would also have to use cash reserves -- of which Crozer (and others) have minimum or none due to this economic crisis-- to replace the plan’s losses that have been brought on by the market’s devaluation. Not correcting this requirement would mean further workforce reductions and, in some cases, losing businesses.
Congressman Sestak informed Ms. Richards that he had already introduced legislation to address burdensome requirements in the last session of Congress and that provisions of his bill were included in the Worker, Retiree, and Employer Recovery Act of 2008, which became law on December 23, 2008. The bill allows single-employer plans to “smooth” out their unexpected asset losses and adjust to the transition of new funding rules established by the Pension Protection Act. But Congressman Sestak stressed more needs to be done and that he was working toward a two year moratorium on the requirements until this economic slowdown is over, so that businesses-- like Crozer -- will avoid workforce reductions or even closure.
Born and raised in Delaware County, former 3-star Admiral Joe Sestak served in the Navy for 31 years and now serves as the Representative from the 7th District of Pennsylvania. He led a series of operational commands at sea, including Commander of an aircraft carrier battle group of 30 U.S. and allied ships with over 15,000 sailors and 100 aircraft that conducted operations in Afghanistan and Iraq. After 9/11, Joe was the first Director of "Deep Blue," the Navy's anti-terrorism unit that established strategic and operations policies for the "Global War on Terrorism." He served as President Clinton's Director for Defense Policy at the National Security Council in the White House, and holds a Ph.D. in Political Economy and Government from Harvard University. According to the office of the House Historian, Joe is the highest-ranking former military officer ever elected to the Congress.
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