Originally, Beth Israel Deaconess Medical Center had projected that it would have an operating surplus of roughly $18 million for its current fiscal year ending Sept. 30. But now, even this high-profile teaching hospital, which is affiliated with Harvard Medical School, has had to admit that economic forces have changed the picture dramatically.
The center is now predicting that losses for this fiscal year could mount up to as much as $20 million, with key drivers including state Medicaid cutbacks, an unfavorable contract with Blue Cross and Blue Shield of Massachusetts and an unexpected fall in patient volume.
Hospital CEO Paul Levy, in an email to employees, noted that if volumes return to what executives had predicted, the facility can break even. However, if volumes remain where they are, large losses seem likely, Levy said. So far this year volume is down 1 percent, despite volumes growing 4 percent in 2007 and 4.6 percent in 2008.
To address these issues, the hospital will focus on cutting personnel expenses. Levy has said that he may be able to keep layoffs to a minimum if employees voluntarily give up vacation or sick days, accept voluntary pay cuts or furloughs or relinquish a 3 percent pay raise due to take effect April 1.
Levy has said he would reduce his own pay by 10 percent and ask vice presidents and senior vice presidents to take voluntary pay cuts of 5 percent. Also, bonuses for senior managers are being canceled for 2009, which could add up to a 25 percent pay cut overall for these employees.
To learn more about Beth Israel's situation:
- read this piece in The Boston Globe
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