The University of Maryland Medical Center will send layoff notices to employees at the end of the month as it looks to cut costs in the wake of federal budget cuts and what it and other state hospitals have called inadequate rate increases.

Jeffrey Rivest, president and CEO of the Baltimore hospital, sent an email to managers Tuesday that said individual letters regarding layoffs would be given out June 25, 26 and 27.

The number of people who will lose their jobs still is being finalized, said spokeswoman Mary Lynn Carver said. She also said the dates of the layoff notifications could change.

Layoffs also could occur at other hospitals under the University of Maryland System, which includes 12 hospitals. Each hospital controls its own budget.

"We have been working with staff to reduce costs for some time and they are aware that we are planning budget reductions that will be implemented in phases over the next several months," Carver said. "These reductions will cause some jobs to be lost at the medical center."

Hospitals across the state have said they are looking to cut costs because of a 2 percent cut in Medicare payments required by federal sequestration. The cuts, which began in April, are part of $85 billion in across-the-board federal spending reductions. The U.S. Department of Health and Human Services plans to cut $15.5 billion under the plan, with much of it coming from Medicare.

Medicare patients will not face reductions in benefits under sequestration. Instead, the federal government specifies that cuts should be made to payments to hospitals and doctors and to monthly payments made to private plans that administer parts of Medicare.

Hospitals also say rate increases approved by the state over the last several years have not kept up with inflation, causing further financial strain.

The Health Services Cost Review Commission, which sets hospital rates in the state, recently voted to increase rates by 1.65 percent for the first six months of the fiscal year, which begins July 1.

The Maryland Hospital Association said the decision will cause the combined operating margin of its member hospitals to plummet to negative 0.24 percent. It had sought a rate hike of 2.43 percent, which also would have squeezed margins, but still left hospitals operating in positive territory.

"You should continue to make this topic a key agenda item at your department staff meetings," Rivest wrote in his e-mail, referring to budget reductions. "It is important that all staff recognize the serious nature of the reimbursement changes and the obvious consequences, which will include job loss throughout the healthcare industry in Maryland."

Rivest said he expected to talk about the issue with staff further at a manager's meeting June 20.

The medical system already began cutting in other areas. It said last month that its Maryland General hospital in Baltimore would close its obstetrics unit June 30. About 50 employees, including 10 to 15 doctors and midwives are expected to lose their jobs, although they can apply for others within the UMMS system.

The decision to stop the services was made because of a declining number of deliveries at the hospital, Carver said. The hospital delivered about 1,200 babies annually five years ago and now delivers about 400 each year.

Baltimore Washington Medical Center in Glen Burnie, also owned by University of Maryland, has cut employee benefits, including cuts in bonus pay, vacation days, pay differentials and payments for not taking benefits. Carver also said layoffs are expected at that hospital.

Other hospitals also are looking at ways to cut.

The chief financial officer of Meritus Health in Hagerstown recently said it was considering eliminating paid time off to deal with financial constraints. Vanderbilt University Medical Center in Nashville, Tenn., announced a similar strategy in April to deal with federal budget cuts. Under its plan, the staff won't accrue vacation time for three months or receive pay increases, according to the Tennessean newspaper.

Anne Arundel Medical Center said job vacancies are being scrutinized carefully and that the hospital is reviewing positions to make sure they can be supported.

andrea.walker@baltsun.com

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