UCSF Stanford Health Care, Northern California's largest academic medical center, said last week it will slash 2,000 jobs from its 12,500-member work force to help offset a growing budget deficit, projected to hit $170 million over the next two years.
The cuts, over the next 17 months, represent 16% of the work force. Officials say the reductions will save $112 million.
The four-hospital, 1,350-bed system, based in San Francisco, said last month that it might need to cut staff to balance its budget and prepare for tough times ahead (March 15, p. 34).
System executives blamed the need for deep cuts on flat or declining revenues from Medicare, Medicaid and managed-care plans at the same time that the system's costs are rising.
"We're caught in a vise," said Peter Van Etten, the system's president and chief executive officer.
Van Etten said the layoffs are not connected to the controversial November 1997 merger that created the system. The four hospitals that came together to form UCSF Stanford Health Care are the University of California San Francisco Medical Center and UCSF/Mount Zion Medical Center, both in San Francisco, and Stanford Hospital and Clinics and Lucile Salter Packard Children's Hospital at Stanford, both in nearby Palo Alto.
When touting the benefits of the merger, UCSF and Stanford officials predicted the consolidation would not result in layoffs and would generate more than $100 million in savings over its first three years.
Just a year and a half later, however, things have changed dramatically. The first wave of cuts, in the next few months, will eliminate 1,275 full-time- equivalent positions. About 800 of those will come from layoffs and the balance from attrition. Another 725 jobs could be trimmed later this year, system executives said.
Most of the targeted jobs will be administrative and other nonclinical positions.
The savings from staff cuts will generate about two-thirds of the cost reductions the system needs by the end of August 2000, Van Etten said. The balance, or $58 million, will come through reductions in pharmaceutical and supply costs, and through other, unspecified steps.
Van Etten said the system is projecting a $50 million loss on about $1.5 billion in revenues for the fiscal year ending Aug. 31 and a $120 million loss next fiscal year.