Springfield Medical Care Systems, Inc. and Springfield Hospital Announce Restructuring Plans

SPRINGFIELD, VERMONT (February 1, 2019) – Springfield Medical Care Systems,
Inc. (SMCS), and Springfield Hospital today announced a restructuring of its
operations to reduce expenses and improve the organization’s financial
performance. The restructuring, which is part of a broader plan to ensure ongoing
access to quality healthcare services in the region, includes the elimination of
positions and system-wide wage adjustments to better align the system’s workforce
and costs to current market demand.

“These decisions are incredibly difficult, and we have worked hard to limit staffing
reductions as we begin the turnaround necessary to stabilize this organization so
that we can provide great care now and in the future,” said George Lamb, Chairman
of the Board for SMCS. “Though we know these changes are necessary, we deeply
regret the personal impact of this reduction. We are grateful to the state, our
community and the staff for their ongoing support as we manage through this

Like so many rural hospitals and health systems throughout the country, SMCS and
Springfield Hospital are faced with significant financial challenges. To move
forward, the organization must reduce $6.5 million in annual costs to be
implemented as quickly and efficiently as possible. This work requires SMCS and
Springfield Hospital to consider every option available. Staffing and wage reductions
are an initial step of this overall plan. The remaining items such as renegotiated
vendor contracts, and other organizational changes, are in development and will be
shared in the coming days and weeks.

Approximately 27 positions will be eliminated – which represent less than six
percent of the total workforce – and are spread throughout the organization, with
careful consideration of patient care needs and to minimize the impact on any one
area. Addressing staffing costs is an important first step since staffing represents
44% of our overall costs.

System-wide wage reductions will take effect February 24, 2019 and include 10%
for salaried positions, 4% for hourly staff, and a negotiated amount from contracted

These adjustments align staffing to the organizations’ current activity levels. To be
clear, the situation is fluid, and it is possible further staffing adjustments will be
necessary. The need to identify further cost savings remains.
Cecil Beehler, MD, Chief Medical Officer, added, “There is no denying this is a very
challenging time for us. SMCS and Springfield Hospital play a critical role in our
region – providing lifesaving care and improving overall health through prevention,
wellness and population health efforts. Our patients’ health and well-being remain
at the center of everything we do as we continue this difficult, but necessary,

As part of a broader strategic review, individual service lines are being carefully
analyzed to determine market demand and sustainability. As part of this analysis,
options for further collaboration and affiliation with Dartmouth Hitchcock are being
discussed to enhance the availability of needed health care services for residents of
our region.

Additionally, under guidance of counsel, Chapter 11 reorganization is also being
considered as a possibility to help stabilize the situation so services can continue
into the future.

Lamb also stated the Boards are continuing to work closely with the Governor’s
office, including Tom Huebner, and the state and federal congressional delegation to
explore every available opportunity to improve the organization’s current situation.
“The healthcare environment is rapidly evolving, creating challenges and
opportunities in how we serve our communities. Our Board fully recognizes the
need to take immediate action to realign expenses and to develop a sustainable
model for the future,” he added.

Anna Smith, Chief of Marketing & Corporate Communications
Springfield Medical Care Systems
25 Ridgewood Road, Springfield, VT 05156