UMass Memorial Health Care is stepping up its restructuring efforts, telling employees Tuesday that it plans to pare another 140 full-time jobs at its flagship hospital in Worcester.
In a letter to the system’s 13,200 employees, chief executive John G. O’Brien blamed declines in health insurance payments and the number of patients it treats. He said the latest cuts will come on top of about the 150 positions that have been eliminated at UMass Memorial Medical Center in Worcester since February. The system also operates four community hospitals in central Massachusetts.
O’Brien said UMass Memorial Health Care has completed the sale of its home health and hospice division to VNA Care Network & Hospice for an undisclosed price, shedding another 144 jobs from the system’s payroll in the process. UMass Memorial has also put its hospital labs unit up for sale.
Despite the steps to reduce expenses, O’Brien warned that cost challenges remain.
“While significant expense savings and revenue enhancement efforts were implemented in February, significant volume declines in our inpatient services such as cardiology medicine and women’s services—coupled with declining reimbursements—continue to threaten our ability to end this fiscal year with an operating margin that breaks even,” he wrote.
Other hospitals also have disclosed plans recently to trim staffing in the face of rising cost pressures. Last week, Boston Children’s Hospital said a plan to eliminate 255 positions would include 45 layoffs. Jordan Hospital in Plymouth last month said it was doing away with more than 60 jobs.
In an interview, O’Brien said in-patient volume at UMass hospitals had dropped 4 percent from a year ago, partly because more health care procedures can be done on an outpatient basis. He also said health insurers are channeling members to lower-cost treatment facilities, making it harder for teaching and safety-net hospitals such as UMass Memorial Medical Center to compete. The hospital is affiliated with the adjoining University of Massachusetts Medical School.
“Some of what we’re doing right now is looking to the future,” said O’Brien, who is retiring in January. “Because when payment reform is implemented in Massachusetts, it’s going to be very challenging to the academic medical centers. With the tremendous pressure across the country to get health care costs down, I see this pressure for the foreseeable future.”
UMass Memorial, --which also operates Clinton Hospital, Health Alliance Hospital in Fitchburg and Leominster, Marlborough Hospital --and Wing Memorial Hospital in Palmer, posted a $56.1 million profit for the 2011 fiscal year, according to data from the state Division of Health Care Finance and Policy. O’Brien said much of that profit stemmed from investment income.
He said the hospital system expects to break even in operating income for the 2012 fiscal year, which ends Sunday. But it is likely to report an overall net profit, he said, because strengthening financial markets have boosted its investment income again this year.