$57M operating loss for UMMHC; First shortfall in 8 years will trigger layoffs and cost-cutting.

• Author: Nicodemus, Aaron
• Position: Local

Byline: Aaron Nicodemus

WORCESTER -- UMass Memorial Health Care Inc. will post a $57 million operating loss for fiscal 2013, which hospital officials say will necessitate another round of layoffs, service reductions and cost cutting at the region's largest health care provider.

A UMass Memorial Medical Center memo sent to employees Tuesday reported that the nonprofit hospital system will record its first operating loss in eight years for the 12-month period that ended Sept. 30.

However, UMMHC will post a surplus of about $75 million, when investment income and revenue from the sale of two units is accounted for, according to hospital spokesman Robert Brogna.

Dr. Eric Dickson, president and chief executive officer of UMass Memorial Health Care, first told the hospital group's 13,000 or so employees about the operating losses in an Oct. 18 posting on his blog, www.everydayinnovators.org. Dr. Dickson promises to continue talking with UMMHC's employees on his blog and via email about the coming changes.

UMass Memorial ended fiscal 2012 with a $53.4 million surplus, including an operating surplus of $5 million on total revenue of $2.29 billion. For fiscal 2012, it had $48.4 million in investment gains.

In fiscal 2013, the hospital group sold its clinical outreach labs to Quest Diagnostics Inc. and its home health and hospice program to the VNA Care Network and Hospice.

UMass Memorial President Patrick C. Muldoon wrote in his memo, "We've been talking about this for years -- our leaders have been warning us about growing costs, falling patient volumes, the impact of health care reforms and our slow response to our changes. But the size of this loss and the speed at which it is affecting us is truly unmatched.''

According to the memo, $34 million of the operating loss occurred at UMass Memorial Medical Center, which has three Worcester campuses: University, Memorial and Hahnemann.

Mr. Brogna said that what was driving the losses at UMMHC were increased costs; falling inpatient volumes at all of its hospitals; increasing observation...