News & Events

BMC will cut 119 jobs, push for funds

Facing $175m loss, hospital wants more Medicaid money


“We can not cut our way to prosperity or to even break even. We need additional revenue,” said BMC’s CEO, Kate Walsh.

By Kay Lazar

Globe Staff / September 14, 2010

Boston Medical Center announced yesterday that it would reduce its workforce by 119 people as it scrounges for savings to reverse losses projected to reach $175 million in the fiscal year that ends Sept. 30.

The hospital, which employs almost 6,000 people and treats many of the city’s neediest patients, said that the layoffs would account for only a small portion of the savings it needs and that it is hopeful additional Medicaid money requested earlier this year by the Patrick administration will soon be approved by the federal government.

The hospital also is seeking additional payments through a lawsuit it filed last year against the state, accusing it of illegally cutting payments made to the hospital for treating thousands of poor patients.

If no additional funding is found, the hospital, the state’s largest provider of medical care to poverty-stricken families, projects that it will run out of cash reserves by next fall.

“We can not cut our way to prosperity or to even break even. We need additional revenue,’’ Kate Walsh, Boston Medical Center’s chief executive, said in an interview. She added that she did not expect the hospital would get to the point of running out of money, but if that happens, it would probably lead to significant downsizing of staff or consolidation of services with another provider.

“It’s important that we preserve the mission of Boston Medical Center,’’ she said.

The 119 layoffs include 44 nurses and 30 management staff. The union that represents many of the workers, 1199SEIU United Healthcare Workers East, said the cuts will affect a wide swath of services including nursing, patient access coordinators, dieticians, and clinical engineers.

Walsh said if the federal government approves the new money — $90 million a year for two years — by the end of this month, the hospital plans to use some reserves to bring its losses for this year to about $35 million.

Patrick administration spokeswoman Jennifer Kritz said the state is “committed to working closely’’ with BMC and several other hospitals that care for many poor patients to help them receive additional federal funding, but could not say when that money might be coming.

In the meantime, Walsh did not rule out further belt-tightening. She is scheduled to address staff members today in a series of meetings to outline six task forces that will be charged with finding ways to further streamline operations.

“We will be redeploying people and staffing more directly to demand,’’ Walsh said. “If we have people on days and there is more clinical need in the evenings, we will be matching our workforce to where our patients need us.’’

Earlier, BMC had projected a $134 million loss for this fiscal year, but Walsh, who became chief executive in March, said several key factors changed, creating the larger $175 million budget hole. She said the hospital’s growth in revenue from outpatient services was not as great as anticipated, and the hospital cared for more Medicaid patients than it had expected and was paid less than expected for that care. She said the hospital is reimbursed for about 60 cents for every dollar it spends on Medicaid patients.Continued…

That Medicaid reimbursement is at the heart of the hospital’s lawsuit against the Patrick administration, which was filed in July 2009. The state calculated the new Medicaid rate by considering the average cost of caring for Medicaid patients at Massachusetts hospitals and paying 75 percent of that amount to encourage efficiency, the lawsuit contends.

The Patrick administration declined to comment yesterday on the pending lawsuit. In an e-mailed statement, the state’s Health and Human Services secretary, Dr. JudyAnn Bigby, said the state recognizes the “vital role’’ safety-net hospitals such as BMC play in caring for low-income patients.

“In the face of unprecedented budget challenges, everyone funded and served by state government has felt the impact,’’ Bigby said. “We remain committed to continuing our work with Boston Medical Center.’’

In earlier interviews, state officials have said that Boston Medical Center’s costs are 20 percent to 30 percent higher than those at similar hospitals, suggesting that cost savings are possible.

Walsh in yesterday’s interview said the hospital does have a large proportion of veteran staffers who are unionized and are paid at the higher end of the scale. But she said that is not out of line with other city hospitals.

“I believe we have demonstrated that we are in the middle of the pack of Boston teaching hospitals and our cost structure is derived by that and is further challenged by the kind of patients we care for,’’ she said.

“I believe,’’ she added, “that the state now recognizes we share their goal of delivering the right care to the right patient at the right place as effectively as possible.’’

Veronica Turner, executive vice president of 1199SEIU and a former BMC employee, said in a statement that Boston Medical Center is already among the most efficient in Massachusetts, a reference to the notice the hospital sent the union explaining that the layoffs were 1/8intended to make the hospital more efficient.

“Patient care access is suffering because the state has failed to provide fair reimbursement for care, and its management is not effectively communicating with staff about a plan for the hospital’s future,’’ the statement said.

Kay Lazar can be reached at