During the Health Center’s Board of Directors meeting on June 6, Dr. Peter J. Deckers, executive vice president for health affairs, presented a $655 million budget for fiscal year 2007 that includes measures to realize about $7.25 million in savings and end the year in the black.
Central to the cost savings initiative is a workforce reduction of approximately 60 filled positions and 20 unfilled positions.
“The financial downturn was bigger than expected,” he said, noting that the Health Center will end this year with a deficit of approximately $1.3 million.
Some of the factors that contributed to the financial challenges include:
- • a weakening trend in clinical volumes;
- • an unusually high turnover of clinical faculty and unanticipated medical leaves
- • continuing decreases in research awards;
- • the impact of tenured faculty obligations; and
- • state support below current services levels.
“To help prevent an operating deficit from recurring in the fiscal year beginning July 1, we have had to set priorities to get our budget back on track,” he said.
“These priorities include investing in those areas where we believe we can get an immediate return on our investment.”
Deckers noted that special emphasis will be placed on building clinical practices for new faculty members in areas including the signature programs in cardiology, cancer, and musculoskeletal health.
Along with the workforce reductions, other cost reduction measures will be taken, Deckers said.
Managerial and academic merit increases will be deferred for three months, the research incentive program will be suspended to allow for a thorough review of the plan, and additional savings will be sought through work redesign efforts throughout the organization.
“We deeply regret that workforce reductions are necessary,” said Deckers, in a message to Health Center employees on Monday.
“Our faculty and staff account for approximately 64 percent of the Health Center’s total operational expenses, so when serious expense cuts must be made we have very few reasonable alternatives.
“Workforce reductions of any magnitude are exceptionally painful,” he added.
“They result in the loss of dedicated and valued employees and create unease throughout the organization. I ask that you continue to do what you do with professionalism, integrity, and a great sense of purpose as we work together through these difficult times.”