SALEM — North Shore Medical Center is planning to lay off workers and cut its budget by $45 million in an effort to deal with “unsustainable” financial losses, according to a letter from its interim president to employees.
A hospital spokeswoman said Thursday that officials expect “fewer than 200” layoffs, but are trying to find other jobs within parent company Partners HealthCare to reduce that number.
North Shore Medical Center includes Salem Hospital and Union Hospital in Lynn and has about 4,000 employees. The Feb. 15 letter from Dr. Gregg Meyer said the cuts represent 10 percent of the organization’s operating budget and will affect all departments.
“In this climate, our losses are unsustainable and a business-as-usual approach will not support our viability in the future,” Meyer wrote. “The time to act is now.”
In an interview, Meyer said the organization cannot continue on its current course. It lost $36 million in 2015, more than any hospital in the state, and another $48 million in 2016.
Meyer said the organization is on track to lose even more money in 2017 unless changes are made. He said employees will be informed of the details of the layoffs in mid-March.
“This is painful,” he said. “This is difficult stuff.”
The layoffs and budget cuts come as North Shore Medical Center is embarking on a $207 million expansion of its Salem campus. The expansion will coincide with the eventual closing of Union Hospital and consolidation of services in Salem, a move that is expected to save $10 million to $15 million per year.
Meyer, who is serving as interim president until newly named president Dr. David Roberts takes over this spring, said North Shore Medical Center has relied for years on Partners HealthCare for financial support. Partners, which includes Massachusetts General and Brigham & Women hospitals, is the largest health care organization in the state.
But Meyer said Partners posted a $108 million operating loss in 2016, and North Shore Medical Center can no longer rely on the company to “make things whole.”
“The notion that we could always go back to Partners is not true any more,” he said. “In some ways that allowed us to put off hard decisions. We cannot do that anymore.”
Union officials and Salem Mayor Kim Driscoll could not be reached for comment as of deadline.
Cuts and adjustments
Meyer said the cuts will happen in two phases. The first $20 million will come through cuts within the authority and control of North Shore Medical Center and the affiliated North Shore Physicians Group, such as staffing and the use of overtime.
The additional $25 million in cuts will be determined as part of a “system-wide strategy to optimize efficiency and innovation across Partners Health Care,” Meyer wrote in his letter.
The $45 million in cuts represents about 10 percent of North Shore Medical Center’s operating budget.
“Change is never easy, and this communication will be unsettling,” Meyer wrote. “The natural question is ‘what will this mean for me?’, and at this time, we do not have that fully answered.”
One change already in the works, Meyer said in an interview, is the phasing out of the hospital’s 24-bed in-patient pediatric unit in Salem. Meyer said vaccines and other advances have dramatically reduced the number of pediatric in-patient admissions over the years at hospitals.
Children will still be able to stay overnight for observation, but most children admitted as an in-patient will be transferred to Mass General, he said. Meyer said the change will affect a “small number” of children. Many of the more seriously ill children already go to Mass General, he said.
North Shore Medical Center will continue to do pediatric surgery, Meyer said. The hospital also handles more than 15,000 emergency room visits by children.
“This isn’t walking away from the care of kids,” Meyer said. “This is adjusting how we care for kids.”
The expansion at the Salem campus will include a new emergency department and an increase in medical/surgical beds and psychiatry beds. Meyer acknowledged the apparent paradox of an organization expanding and cutting at the same time, but said the moves are necessary for North Shore Medical Center to grow.
Meyer said the hospital’s current emergency room is inadequate, and there is a need in the area for more psychiatry beds and mental health services.
“Part of managing health care involves having one foot on the brake and another foot on the gas at the same time,” he said. “We can’t just cut our way to an organization that’s going to meet the needs of the community. We have to do both.”
In his letter, Meyer said North Shore Medical Center’s goal is to “break even” by 2019, when the consolidation and expansion is scheduled to be complete.
“I’m very confident this will put us in a position that will allow us to be there for the community and not worry about losing money every year,” he said.
Staff writer Paul Leighton can be reached at 978-338-2675 or firstname.lastname@example.org.