Healthcare network says it may lay off hundreds

Cambridge Health Alliance, a key part of the Boston area's healthcare network, is warning that it may have to lay off hundreds of workers and consolidate operations because of deep cuts in state funding.

The healthcare network - which includes hospitals in Cambridge, Somerville, and Everett, as well as 20 community health centers - serves a disproportionately large share of the area's poor. It is operating on a $22 million deficit budget this year.

In a stark memo to staffers, alliance CEO Dennis D. Keefe wrote that the Patrick administration's plan to slash $55 million from the organization's budget would "translate to a reduction of more than 20 percent of our workforce." The memo noted that the alliance is about two-thirds of the way through a previously announced plan to cut expenses by reducing staff by the equivalent of 300 full-time jobs.

"Unless the financial picture improves or we find other ways to trim costs further, there will be more reductions," Keefe wrote. "It is important to note that we are doing everything possible to try and impress state officials on the impact these cuts will have."

Governor Deval Patrick last week announced sweeping cuts that include nearly $300 million for healthcare spending to help close a $1.4 billion state budget gap. The alliance and Boston Medical Center were especially hard hit.

Now, officials at both healthcare facilities are scrutinizing their operations for potential savings while lobbying lawmakers in hopes that they will reverse some of the governor's proposed cuts.

Keefe declined to comment, but Alliance spokesman Doug Bailey said the network is doing everything it can to lessen the impact on patients. Earlier in the week, the Alliance announced that over the next three months it would close its Oliver Farnum Senior Health Center in Cambridge, where patient volume was down 25 percent this year.

"The intent is to not to reduce our level of service at all, but to combine access points," Bailey said. "Whether that can be done in light of these cuts is questionable."

Senator Anthony D. Galluccio, a Democrat whose district includes Cambridge, Somerville, and Everett, said he is organizing a meeting early next week of lawmakers whose communities also are served by the Alliance's many health centers. He is urging those legislators to fight the cuts.

"We all understand the give and take of budget cuts," Galluccio said. But dismantling the largest public health authority geographically in the Commonwealth, which serves the most vulnerable residents of the Commonwealth, should not be part of that game plan."

Dr. JudyAnn Bigby, state secretary of health and human services, said she understands the tough road the Alliance faces, but said its leaders have not told her in private discussions that they feared a dismantling of the network's core services.

"It's difficult for everyone to go through this, and we will continue to work with Cambridge as much as we can to work through this issue," Bigby said. "But we have no way to lessen any of the cuts we announced."

Even if the Alliance wins a reprieve from state cuts, it will still face difficult decisions next fiscal year because it is set to lose $94 million in Medicaid funding it has been receiving under the state's 2006 healthcare law. Lawmakers earmarked money for the Alliance and Boston Medical Center because both treat a disproportionately large number of low-income patients. But other hospitals have complained about being left out. The payments are slated to end next year.

The governor said he will not reimburse Boston Medical Center for $64 million in services it delivered to low-income Medicaid patients last fiscal year and will also cut $30 million in Medicaid rates for this fiscal year.

BMC spokeswoman Ellen Berlin said that if those cuts stand, the facility is projecting a deficit in the tens of millions of dollars for this fiscal year. She also said that it has not made any decisions about what areas to cut but expects to leave currently vacant management and administration positions unfilled until its budget situation becomes clear.

Kay Lazar can be reached at klazar@globe.com.