Profit estimates came up $18M short last year
By CORTNEY FIELDING Special to the Daily Press
UCLA Healthcare announced that it will lay off employees and eliminate jobs in both its Santa Monica and Westwood branches this summer, making it the second hospital within the city to undergo budget cuts in recent years.
According to administrators, who estimate the move will save the hospital between $1.5 million and $2 million when coupled with other cost-saving measures, the layoffs and a hiring freeze are necessary because of declining revenues and increased costs within the health care industry.
UCLA officials said the institution’s financial situation has been worsening since July of 2003. Last year, it made $11.7 million in profits, but was estimating $30 million.
Officials project similar profits this year. “We are not performing at a level to achieve our budget,” said UCLA Chief Nursing Officer Posie Carpenter.
UCLA spokesman Ted Braun said the hospital is trying to stave off future budget problems in the wake of an increasingly difficult business climate. UCLA officials are concerned that increased costs will continue to erode profits, and eventually create a system that barely breaks even.
“We are trying to avoid significant losses for the system,” he said. “Consequently, we need to take steps now to reverse the shortfall and improve the system’s financial performance and future outlook. If UCLA Healthcare did not implement this improvement plan, the system would be looking at significant financial losses for this fiscal year and the next one.”
UCLA will release details about the cuts — due to take effect in July — in upcoming weeks. While the company has not said exactly which employees will be affected, a majority are expected to come from its Westwood branch, according to Braun.
It remains unclear how many of Santa Monica’s 1,300 employees will find themselves out of work.
Braun said about 40 people will be laid off in total. Another 100 to 150 positions will be eliminated through a variety of ways, including work reassignments and attrition.
The cuts come a year and a half after Saint John’s Health Center laid off some 200 employees in an effort to make up for a budget shortfall. However, in contrast to Saint John’s, which terminated multiple patient services and shut down numerous outpatient services, administrators at UCLA contend the cuts will not directly affect patient care because departments or services won’t be eliminated.
“This should remain invisible to patients,” said Carpenter, adding the hospital is expected to spread the cuts across multiple departments in both locations to ensure none will be cannibalized in the process.
While all programs and services should remain intact, UCLA will be making changes in its surgery quotas to find the most profitable “combination of services,” Carpenter said.
The hospital is expected to increase the number of surgeries deemed the most profitable, such as orthopedic procedures, while decreasing those which are having the biggest negative impact on the hospital’s budget.
“We may have to do a little less of some things,” Carpenter said.
The Santa Monica branch of UCLA Medical Center will be spared the bulk of the layoffs, according to Carpenter, because of its “aggressive” positioning throughout the budgeting process. To ensure its staff would not become casualties, the hospital has limited the number of employees hired.
The Westwood hospital didn’t practice the same level of oversight, Braun said.
However, while the Santa Monica hospital will retain most of its staff, it’s not immune to budget cuts, Carpenter said. Possible actions include eliminating after-hour call schedules for non-invasive surgery and pinpointing new technologies that would eliminate the need for workers in some departments.
Both UCLA and Saint John’s attributed their revenue problems to inadequate reimbursement from HMOs, the rising numbers of uninsured patients, and insufficient government reimbursement for Medicaid patients.
“Reimbursement for providing care to people covered by these plans (HMOs) does not come close to covering our costs,” Carpenter said. “While our costs to treat patients continually increase, we are not getting corresponding increases in reimbursement from insurers.”
UCLA also has a contract with Medi- Cal, a state funded insurance program. Carpenter said the state reimbursement plan falls short of covering the costs of treating their patients.
The hospital’s Medi-Cal census has increased significantly, Carpenter said, “increasing the financial strain on our hospital.”
The American Federation of State, County and Municipal Employees, which represents many of the UCLA Medical Center employees, said they haven’t seen solid evidence to support the hospital’s claims.
“I’m not sure things are as bad as they are making us believe,” said Nicole Moore, union organizer for Local 3299, adding that the last thing the community needs is to lose more workers in its hospitals.
“The number of patients only grows larger,” said Moore, who feels the hospital has already spread existing employees too thin to adequately take care of patients.
Moore said her workers still do not know who among them will be out of a job this summer.
“It’s wait and see,” she said. Meanwhile, at Saint John’s, CEO Bruce Lamoureux said its financial picture has brightened in the past year and a half.
There haven’t been any layoffs at Saint John’s since December 2003, and Lamoureux doesn’t anticipate any more in the near future.
“I’m looking forward to an improved operating performance in 2005,” Lamoureux said.
Originally published in the Santa Monica Daily Press print edition on March 2, 2005. Read the original PDF.