Health

Facing $75 million budget gap, Baystate Health will cut about 300 jobs

August 12, 2016

1 minute to read

Baystate Health plans to eliminate 300 positions in the coming weeks as part of an effort to close a $75 million budget gap, the nonprofit said Friday.

In a memo sent to employees, Baystate Health President and CEO Mark Keroack wrote that the majority of the layoffs will occur in the Springfield-based operations, but the impact will likely be felt throughout the company. Cuts “will affect management as well as frontline team members, prioritizing non-clinical areas for reductions,” he wrote.

“Even after these painful steps we expect to face a remaining budget gap of $15 million,” he wrote. “We’ll continue our work to address this gap and do all we can to preserve jobs.”

Keroack said the most significant factor behind the budget gap for the company is “the continuing shortfalls in the reimbursements we receive for providing Medicaid services.”

According to The Boston Globe, Medicare cannot pay any hospital in a state less than what the program pays rural hospitals for their wages. Nantucket Cottage Hospital, which is owned by Partners HealthCare, sets the minimum rate in Massachusetts as the state’s only rural hospital.

While in the past that helped keep Medicare wage components high, the Globe reports that miscalculations by consultants hired by Partners this year are expected to reduce federal payments across Massachusetts by about $110 million. An appeal by Partners to correct the information was rejected by federal officials this week, according to the Globe.

Keroack wrote in his memo that the rejected appeal would mean a $23 million cut in the nonprofit’s Medicare payments next year.

“Our leadership has worked hard, as our financial challenges have mounted in recent months, to minimize the impact of these challenges,” he wrote. “We are doing everything we can to help our elected leaders change some of the longstanding disparities in Medicaid reimbursement between different provider organizations in Massachusetts, which have been a major driver of our current difficulties.”