UMass Memorial Announces Layoffs, Cost Cuts
UMass Memorial Health Care is seeking to sell two of its business divisions, a move that could result in 700 to 900 layoffs, the health care system said in a statement.
The system, which employs more than 13,000 and is the largest employer in Central Massachusetts, will eliminate 150 full-time positions in the coming weeks. But that won't be enough to reduce expenses by $50 million in the near term, which UMass said is needed to avoid ending the fiscal year with a loss. The system also hopes to sell off several of its businesses.
Officials said they are in discussions with a potential buyer for its hospital labs outreach business, which provides lab testing services for doctors in several states. Testing reimbursements have fallen as insurers have pushed physicians to use lower-cost options, UMass said.
UMass also plans to seek a buyer for its Home Health & Hospice, which is based on Lincoln Street in Worcester. The facility took in $2 million less in revenue than it paid in expenses last year and is experiencing fewer referrals. The move will not affect home health and hospice operations in Leominster and Palmer.
The announcement comes after the health system posted its lowest surplus in years, $27.9 million, in the fiscal year that ended in September 2011. That's compared to a surplus of $89.6 million the year before.
Much of the decline was due to the system's so-called "health ventures" arm, which provides lab testing, imaging and other services to hospitals and medical groups.
In late December, UMass Memorial CEO John G. O'Brien said executives would have to evaluate new business models as private competition becomes fiercer and insurers and businesses push for slower increases in health care costs.
O'Brien sent a letter to area businesses over the weekend. He said businesses have contacted him to express concern that going to UMass for medical care results in higher co-pays under some insurance plans.
The letter detailed some of UMass's recent cost-cutting initiatives. They include saving $1.3 million in electricity costs through contract changes, saving $8.4 million by standardizing medical supplies and $12 million through process improvement training for staff, and moving from paper to electronic medical records.
"We have a comprehensive plan in place to make even further changes in the coming year, again, all with the goal of becoming more affordable while not sacrificing the quality of care provided by our skilled staff," O'Brien wrote.
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