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Hospital network cutting 354 positions

Baystate blames Medicaid funding

By Robert Weisman
Globe Staff / July 21, 2011

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Baystate Health, the Springfield parent of Bay State Medical Center and two other Western Massachusetts hospitals, yesterday said it will shed 354 jobs, or about 3.5 percent of its 10,064-person payroll, to make up for a projected $25 million budget shortfall.

The cutback comes as Baystate and other hospital networks across the state grapple with deepening cuts in Medicaid, the state program that insures low-income patients. Baystate estimates it lost $26.5 million last year - more than its anticipated shortfall - because of state underfunding of Medicaid.

“After engaging in strategies to increase revenue and reduce expenses, this was the last resort so we could be financially viable,’’ said Baystate spokeswoman Jane S. Albert. “We have an obligation to meet our budget targets because we have to reinvest in our facilities.’’

Albert said the cuts would affect management and staff across the board, but Baystate will try to minimize the impact on patients. In all, the health care system will lay off 169 workers and do away with 185 vacant positions. The lion’s share of the layoffs will occur at Baystate Medical Center in Springfield, its flagship 659-bed teaching hospital affiliated with Tufts Medical School.

Baystate Medical Center posted a $73.8 million profit last year. That gain was partly offset by losses at its two community hospitals: 90-bed Baystate Franklin Medical Center in Greenfield, which lost $4 million, and 25-bed Baystate Mary Lane Hospital in Ware, which lost $2.8 million. The system as a whole, which also owns 60 medical practices, an ambulance company, and other operations, had operating income of $49 million, but that money is used to fund technology upgrades and capital improvements.

The job cuts at Baystate Health, the largest private employer in Western Massachusetts, are the latest in a series of retrenchment moves that have eliminated thousands of jobs at hospitals in the state over the past few years. Boston Medical Center has cut more than 160 jobs. Cambridge Health Alliance, which runs hospitals in Cambridge, Somerville, and Everett, has shed more than 600. Worcester’s UMass Memorial Health Care, which runs four Central Massachusetts hospitals, has pared 350.

Unlike many other hospital systems in the state, however, Baystate has consistently reported overall financial gains, even as the broader economy has weakened. It is currently building a project called Hospital of the Future, including a new heart and vascular center, to add capacity and replace outdated facilities in Springfield. It is scheduled to open next March.

“Over the last decade, Baystate has been remarkably profitable,’’ said Alan Sager, professor of health policy and management at the Boston University School of Public Health. “The challenge is for every hospital to garner enough revenue to cover the cost of efficient operations. From a hospital standpoint, any subtraction of revenue is something that upsets them. But they’ve made a choice to cut people instead of a capital project.’’

Albert said the health care system acted because it estimated that planned Medicaid cuts would cause a $25 million budget shortfall at Baystate, and that shortfall would grow to $54 million next year. Medicaid patients represent about 26 percent of the patient population at Baystate’s hospitals. “That is why we had to take these steps,’’ she said.

Robert Weisman can be reached at weisman@globe.com.

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