News & Events

Beverly hospital group to cut jobs

Slashing 75 to 100 positions will help Northeast save $15m

By Robert Weisman, Globe Staff

Citing a “rapidly changing health care environment,’’ the new chief executive of Northeast Hospital Corp. in Beverly told his staff yesterday that 75 to 100 jobs will be eliminated and the company’s senior management structure streamlined in the next four to eight months.

The cutbacks will help Northeast save $15 million over the coming year and a half, Kenneth Hanover, who took over the North Shore health care system in October, wrote in a memo to employees.

Northeast is the parent of 220-bed Beverly Hospital, 58-bed Addison Gilbert Hospital in Gloucester, 64-bed psychiatric BayRidge Hospital in Lynn, which provides psychiatric care, and a Danvers outpatient hospital.

A copy of Hanover’s memo obtained by the Globe said job cuts would be made in three phases, starting this week.

“I recognize the anxiety a prolonged process will create within our workforce,’’ Hanover wrote, “however, changes must be implemented with caution and care necessary to ensure their appropriateness and sustainability.’’

The company has about 2,400 employees.

Northeast, which has been dogged by management problems over the past two years, eliminated 22 jobs last fall. Then, as now, it hired FTI Consulting, a management advisory firm specializing in restructuring, to identify where staffing cuts could be made without jeopardizing clinical care or patient safety.

The hospital group reported a financial gain of $5.8 million for its 2009 fiscal year, which ended Sept. 30, after losing $6.8 million in the previous year, mostly because of the declining value of its investments.

Pauline M. Pike, chief operating officer, said the belt tightening was not prompted by a crisis but reflected a recognition the hospitals have to become more efficient.

“As difficult as this is, we are trying to do this is a thoughtful way and be proactive and not wait till we’re in crisis,’’ Pike said.

Health care providers across the state are struggling with pressures ranging from cuts in government reimbursements to demands from insurers to reopen contracts and slash payments to ease the growing cost burden on businesses and individuals.

The squeeze is being felt by institutions as diverse as Brigham and Women’s Hospital in Boston, a Harvard University-affiliated academic medical center that has told managers to identify $35 million in budget cuts in the coming year, and Berkshire Medical Center in Pittsfield, which is eliminating 124 jobs.

Hanover was recruited last fall from Health Alliance in Cincinnati, a Southwest Ohio health system where he had been president for eight years. Northeast had been without a chief executive for almost a year. Hanover’s predecessor, Stephen R. Laverty, resigned in November 2008 after months of conflict with doctors and nurses, who voted “no confidence’’ in his leadership.

One source of friction was the management role of Paul Galzerano, a former associate vice president at Beverly Hospital who was arrested in 2008 and charged with possession of stolen property. Police searching his house allegedly discovered paintings, antique furniture, and a grandfather clock that belonged to the hospital but had disappeared during a renovation project.

Galzerano was arraigned on bribery and larceny charges in Salem Superior Court last month and accused of defrauding the hospital of almost $500,000 in what prosecutors described as a scheme to steer work on the renovation to contractors in exchange for kickbacks. They also said he stole hospital property.

He pleaded not guilty and was released on personal recognizance.

Robert Weisman can be reached at