Health System makes major layoffs

By Eric Tucker The troubled University of Pennsylvania Health System will eliminate 1,700 positions in the next six months to complete a 20 percent workforce reduction this year, Health System officials announced yesterday. The Health System will cut 975 administrative positions from each of its four wholly-owned hospitals beginning in just 10 days. An additional 725 positions, mostly in specialty facilities, physicians' practices and home care, will be eliminated before June 30, 2000, the last day of the current fiscal year. Employees who will be affected by the firings have not yet been informed and officials said they would not say which departments would be hardest hit. It is not clear how many positions will be cut through attrition. All told, these two phases of cuts, coupled with the elimination of 1,100 positions in late May, means that the financially troubled Health System will have eliminated 2,800 positions in a 14-month span. Officials hope the three rounds of layoffs will save the Health System a total of $263 million in cuts by Fiscal Year 2001. UPHS posted a $198 million deficit in the most recent fiscal year, according to statistics released yesterday. The year before, it lost about $90 million. The layoffs were announced yesterday morning by Health System Chief Executive Officer William Kelley at a meeting of the University Trustees' Budget and Finance Committee. "This is truly a difficult time for all of us, but especially for those whose jobs are being affected," Kelley told the Trustees. He defended the "extremely aggressive" response by saying that the layoffs are essential if the Health System is to regain "firm financial footing." "It's absolutely across the board," Health System spokesperson Rebecca Harmon said of the cuts, though she noted that the jobs of employees who are directly involved in patient care are less likely to be affected. The plan announced yesterday is probably the final workforce reductions for the foreseeable future. Other large-scale changes in the operation of the Health System -- like a separation from the University -- now appear unlikely. Harmon also said Kelley's job is not in jeopardy. "I think it would be very difficult to initiate this proposal without Dr. Kelley at the helm," Harmon said. Kelley and other Health System officials have repeatedly blamed their financial woes on decreased Medicare payments from the federal government and delayed reimbursements from private insurers. "Our Health System community is working at both the national and local levels to help stem further losses within the academic medical community -- which, if left uncleaned, threaten the very essence of American medicine," Kelley said in a statement released yesterday. University President Judith Rodin said the plan was "absolutely essential," though she noted the difficulty of implementing it. "The workforce reduction it entails is a very hard step for the institution to take -- and it is taken only because there is no alternative," she said in a statement. According to official statistics, the decreased federal funding will cost UPHS $175 million by 2002. And the Health System spent $66 million in care for which it receives no compensation. The layoffs come from a recent recommendation made by the Hunter Group, a Florida-based consulting firm that is helping UPHS find ways to slash expenses and increase revenue. The Hunter Group has worked with Health System officials for the past two months, presenting them with personnel data and financial information from comparable institutions to help gauge how similar hospitals use their resources. The Hunter Group has asked Health System departments to operate with fewer employees and department chairs now find themselves faced with the grim task of determining exactly which positions are expendable. Anesthesia Department Chairperson David Longnecker said his employees have been divided into different categories -- ranging from "painful but could do [without]" to "impossible" -- based on the department's ability to function without them. A tentative list of employees who could be laid off will be presented today for review by Clinical Practices of the University of Pennsylvania -- an organization containing representatives from each medical department -- and will later be examined by Kelley. The Hunter Group, which is expected to leave campus in early November, is not involved in the decision of which employees get laid off. Though Longnecker would not say how many of his department's employees might be cut, he did say that physicians will be the least affected. "I am not aware nor have I heard a single word about physician reductions," Longnecker said. A division head within one of the Health System's medical departments said he too would soon be presenting a list of about 15 to 20 employees whose jobs might be affected. "We all looked at each employee and tried to decide what impact losing the position would have on our operation," he said. "There's nothing too easy about this." The division head said those people in his department whose salaries came from clinical revenues were more likely to be affected than those who are funded largely through research grants. But both Kelley and Rodin said that the cuts will not affect patient care. "Our patients can continue to depend on us to receive the high-quality care? for which there will be no level of compromise," Kelley said.

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