Baystate Health Laying Off 300 to Help Close $75 Million Budget Gap

SPRINGFIELD — In a memo to employees, Baystate Health President and CEO Dr. Mark Keroack announced the elimination of 300 positions from among the system’s 12,500 employees, citing a budget gap of $75 million for the fiscal year beginning Oct. 1, 2016.

“Many factors are causing this projected shortfall, most significantly the continuing shortfalls in the reimbursements we receive for providing Medicaid services,” Keroack said. “Other factors are also contributing to this challenge, most prominently the recent decision by the Centers for Medicare and Medicaid Services not to accept corrected wage data resulting in $23 million in reduced Medicare reimbursements next year, as well as increased spending on wages and benefits, pharmaceutical costs, and malpractice insurance.”

He explained that Baystate’s leadership team has identified almost $40 million in strategies to mitigate these impacts and reduce the budget gap to about $35 million, but workforce cuts are necessary to further trim the deficit.

“We expect that these reductions will affect management as well as front-line team members, prioritizing non-clinical areas for reductions, and most importantly preserving the quality and safety of the care we provide,” he wrote. “We expect the majority of these reductions will take place in Springfield-based operations, but we anticipate some impact throughout many parts of Baystate Health. As we know more specifics about impact on teams and individuals, we will share them.”

Employees affected by the cuts will have access to severance pay and Baystate Health’s workforce placement and transition services, and may apply for open positions of critical need in the system.

“Even after these painful steps, we expect to face a remaining budget gap of $15 million. We’ll continue our work to address this gap and do all we can to preserve jobs,” Keroack noted. “Our leadership has worked hard, as our financial challenges have mounted in recent months, to minimize the impact of these challenges. We are doing everything we can to help our elected leaders change some of the long-standing disparities in Medicaid reimbursement between different provider organizations in Massachusetts, which have been a major driver of our current difficulties.”