MedStar Washington Hospital cuts 300 jobs, cites mounting financial pressures

November 13, 2013

MedStar Washington Hospital Center has laid off 300 employees, about 5 percent of its workforce, the hospital said Wednesday.

The hospital has cited mounting financial pressures as the reason for the layoffs, which took place last Thursday and Tuesday. Sixty of the positions were in management, according to Donna Arbogast, vice president of public affairs and marketing. None of the positions involve bedside care.

“We conducted a thorough assessment of ways to reduce expenses that do not involve reducing staff, but as of the end of September, we were off budget by $8.5 million,” according to a statement the hospital released Wednesday.

In a letter to hospital employees over the weekend, President John Sullivan said the 926-bed hospital had a 4 percent decrease in admissions and an 8 percent decrease in inpatient surgeries. “This happened so suddenly that we have not been able to decrease our expenses to match this drop in volumes,” Sullivan wrote.

The hospital’s annual net revenue is about $1.1 billion, 60 percent of which goes to personnel expenses.

Like other hospitals in the region and across the country, MedStar Washington has been hurt by cuts in reimbursement from Medicare and Medicaid, as well as by the bankruptcy of D.C. Chartered Health Plan, which stopped paying for care that the hospital provided to its members. The once-prominent Medicaid contractor unraveled over the past year amid financial stress and allegations of its owner’s involvement in political corruption.

The letter said the hospital had a cut of $44 million last year, a combination of reductions in reimbursement for Medicare, dollars lost because of the Chartered bankruptcy, a District bed tax, the across-the-board federal budget cuts known as sequestration and reduced federal subsidies to safety-net hospitals under the health-care law.

In April 2011, the hospital laid off about 200 workers across all departments, none of them involved in bedside care.

Lena H. Sun is a national reporter for The Washington Post, focusing on health.
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