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Northeast cuts 7 positions at area hospital

By Steven Rosenberg
Globe Staff / September 9, 2010

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As part of its plan to save $15 million to plug a budget gap, Northeast Hospital Corp. continued layoffs last week, cutting seven workers — including four nurses — at Addison Gilbert Hospital.

In a meeting with Gloucester city councilors, Kenneth Hanover, Northeast’s chief executive officer, warned that the hospital might also close two outpatient clinics.

Over the last month, 50 employees have been laid off by the nonprofit, which owns Addison Gilbert, Beverly Hospital, BayRidge Hospital in Lynn, and the outpatient centers Beverly Hospital in Danvers and the Cable Center in Ipswich. The layoffs, which have included two vice presidents, nurses, technicians, and support staff from the five facilities, could reach 100 and are expected to be completed by next spring, said Pauline Pike, Northeast’s chief operating officer.

Pike said the layoffs would not include doctors, and added that emergency departments would stay open in Addison Gilbert and Beverly Hospital.

David Schildmeier — a spokesman for the Massachusetts Nurses Association, the union that represents nurses at Northeast — criticized the layoffs and said any cuts should be directed toward management.

“Every administrator should be laid off before any direct-care registered nurse is laid off,’’ said Schildmeier.

But Pike said the layoffs were necessary in order for the hospitals to stay on solid financial ground, and said patient care would not change.

“Unfortunately, because of the uncertainties of our economic climate and health care reform, it’s going to be a continuous process of looking for efficiencies within the organization,’’ said Pike. “The important part is looking for the efficiencies without compromising health care.’’

According to Pike, the layoffs are part of a strategic plan to make up for an expected shortfall of $15 million during the next fiscal year, which begins in October. She said the company expects to receive $15 million less in revenue during that time, and attributed the expected loss of income to lower Medicaid and Medicare government reimbursements, fewer hospital visits, and the downturn in the economy.

This is Northeast’s second major round of layoffs over the last year. Last November, Northeast cut 22 managers, saving the company $1.8 million. Pike said those layoffs were part of a plan to streamline management.

Pike declined to comment on the company’s performance this year and said Northeast’s performance results would be announced next month. During the 2009 fiscal year, Northeast made $5.8 million. The previous fiscal year it lost $6.8 million.

Northeast’s management has been in the news for the last two years. In November 2008, former CEO Stephen Laverty resigned after doctors and nurses gave him a “no confidence’’ vote. Also in 2008, Paul Galzerano, a former Beverly Hospital vice president, was arrested after police discovered antiques from the hospital during a search of his home. Galzerano was arraigned in July in Salem Superior Court on charges of commercial bribery and larceny over $250. He entered a plea of not guilty and was released on personal recognizance.

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