Briefing: UMass Memorial's Operating Loss
There's no doubt that news of UMass Memorial Healthcare's projected operating loss for fiscal 2013, and the possibility of layoffs within the Worcester-based health care system, was disconcerting to its 13,000 employees. But it shouldn't have come as a surprise. Executives have warned employees that recent years of profitability would soon come to an end if the system didn't take steps to correct its course, publishing periodic posts on an informational website, and on CEO Eric Dickson's blog.
What Did UMass Memorial Announce?
On Oct. 18, Dickson announced a projected system-wide operating loss of $57 million for fiscal 2013, which ended Sept. 30. That was followed by a memo from UMass Memorial Medical Center (UMMMC) CEO Patrick Muldoon on Oct. 29, in which He said workforce reductions and elimination of some services could put the hospital back on the path to profitability.
UMass said about $34 million of the loss is attributed to the medical center. In an interview this summer, Muldoon told the WBJ that reducing costs, particularly associated with labor, is crucial at hospitals everywhere.
What's Behind The Numbers?
The projected loss will not be finalized until financial information for fiscal 2013 is made official in December, according to Rob Brogna, spokesman for UMass Memorial. But the downward trend is clear. While the system posted a total surplus of $75 million for fiscal 2013, which is separate from the projected operating loss, Dickson said in his Oct. 18 blog post that it was due to the sale of UMass's clinical outreach laboratory and home health and hospice businesses in 2012, plus investment income.
What's Causing The Operating Loss?
Brogna said a combination of fewer patient discharges and more observations, where patients are monitored but not admitted, have led to lower revenue the last few years. Also, hospitals are seeing federal reimbursements for Medicare patients reduced based on readmission rates. UMMMC received a cut of nearly 1 percent in fiscal 2013. But that will decline in fiscal 2014.
Where Would The Cuts Be Felt?
UMass has not released details on the number of jobs that will be cut, or which services will be eliminated. According to published reports late last week, 16 jobs were cut and the hours of 38 workers were reduced at its Wing Memorial site in Palmer. Other announcements are expected soon.
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