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MedStar Washington Hospital Center cutting jobs

Monday - 11/11/2013, 1:30pm  ET

MedStar Washington Hospital Center is cutting jobs as financial pressures mount at the District's largest hospital.

The total number of layoffs is not yet public, but President John Sullivan told employees the hospital remains "about 120 positions over budget" compared to its fiscal 2014 staffing goals, according to an internal email sent Nov. 7 and obtained by the Washington Business Journal.

Through one quarter of its July-to-June fiscal year, the hospital was $8.5 million short of budget, Sullivan wrote. The hospital's annual budget exceeds $1.1 billion.

Affected managers were informed late last week, and rank-and-file workers will learn their fates on Tuesday, according to hospital spokeswoman Donna Arbogast, who confirmed the authenticity of the email but declined to give a total number of cuts before all workers are informed.

No bedside nurses will be eliminated, Arbogast said.

Sullivan's email goes into considerable detail about the hospital's financial problems, noting a 4 percent decline in admissions and an 8 percent downturn in inpatient surgeries in September. He asked staff doctors and dentists on for ideas to boost volume.

In April, Sullivan wrote, hospital executives instituted a freeze on most positions and hoped attrition would cut labor costs.

"It is my feeling that we've done everything we can to match expenses and revenue, but unfortunately, the above-noted issues have conspired to throw us substantially off budget," Sullivan wrote. "With labor constituting 60 percent of our budget, we must address labor costs and we can't rely on attrition to help us to the degree necessary."

Also stressing the hospital: Reductions in Medicaid managed care reimbursement; a new Medicare rule that re-classifies some higher-paying inpatient admissions as lower-paying "observation" cases; a $44 million reduction in reimbursement from last year and implementation of a new medical record keeping system. Many of the factors he mentioned are problems common throughout the embattled hospital industry.

In his email, he solicited ideas for how to cut costs and "find additional non-budgeted revenue."

"Nothing cures financial difficulties better than an increase in volumes," he wrote. "To that end, I challenge every member of the medical and dental staff to consider new ideas for revenue generation and innovative ways to reduce barriers to growth," he said.

MedStar Washington Hospital Center last laid off employees in 2011, when it cut 200 workers across all departments. About 6,000 people work at the hospital just north of the McMillan Reservoir in northwest D.C.

The nonprofit hospital made $32.2 million in income on $1.15 billion in revenue in fiscal 2012, the last year for which tax records are available. Sullivan said the hospital met budget in fiscal 2013.

© 2013 American City Business Journals, Inc.