Brigham officials told The Boston Globe that the hospital is still profitable, but it is under financial strain because of flatlining payments from the government and payers while labor costs continue to increase. Two major construction projects have also tightened the purse strings; the hospital opened a new $510 million building last year and put a $335 million electronic health record system in place in 2015.
“We need to work differently in order to sustain our mission for the future,” Betsy Nabel, M.D., the hospital’s CEO, and Ron Walls, M.D., its chief operating officer said in a memo to staff.
We aim to reduce expenses and honor our dedicated workforce while continuing to provide the best possible care for our patients. Read more. pic.twitter.com/zZ84QC6GpS— Brigham and Women's (@BrighamWomens) April 27, 2017
Nancy Kane, a professor at Harvard T. H. Chan School of Public Health, told the newspaper the move could lead to other Boston-area providers downsizing as well, particularly those also under Partners HealthCare, like Massachusetts General Hospital.
Brigham officials also acknowledged that the buyouts are a likely sign of layoffs to come later in the year, according to the article. Employees must be 60 years or older for the buyout, and it will exclude almost all physicians, faculty and research staff. Before initiating buyouts, Brigham worked to control costs by leaving open positions unfilled, sending some patients to the lower-cost Faulkner Hospital campus and standardizing its supply chain practices.
The problem, Walls told WBUR, is that the amount of money the organizations needs to operate has outpaced the amount of money coming in.
"Our costs are rising at normal healthcare inflation if you look at drug costs and device costs and labor costs," Walls told the publication. "But the amount that we can be reimbursed has tremendous downward pressure on it, and it's going up much more slowly than the costs are rising."
News of the buyouts broke the same day that the U.S. Department of Justice announced that Partners HealthCare System and Brigham and Women's Hospital agreed to pay $10 million to resolve allegations that the hospital's stem cell research laboratory fraudulently obtained grant funding from the National Institutes of Health. The hospital informed the government about the allegations and the lab was closed in 2015.