After sudden $32M budget cut, UMMC eliminates 280 jobs

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Kevin Cook, health systems executive officer, and Charles O’Mara, associate vice chancellor, flank Dr. LouAnn Woodward, vice chancellor for health affairs at University of Mississippi Medical Center as she explains the new financial action plan.

The University of Mississippi Medical Center announced Thursday it will eliminate 280 jobs statewide as part of its plan to close a $32.7 million budget shortfall.

UMMC expects the financial action plan to save the medical center around $24 million through a combination of reduced expenses and increased revenues. The cuts, which will take place over the next four months, include eliminating 195 jobs and 85 vacant positions.

“When you look at academic medical centers like us all across the country, as well as many other health care entities, they are all kind of facing these challenges, these battles, finding ways to increase revenue through efficiencies and other ways to control costs to continue to focus on quality and still continue to achieve our missions,” said LouAnn Woodward, vice chancellor of UMMC. “So this is quite a challenge.”

The budget shortfall is the result of two things. First was an $8.2 million cut in state funding to the medical center. Due to a revenue shortfall, state agencies across the board have faced as many as three rounds of cuts this academic year. The second blow, $24.5 million, came after the Division of Medicaid reworked the formula for disproportionate share payments, which reimburse hospitals across the state for the unpaid care they provide.

This is not the first time UMMC has made cuts in recent years, but this is the biggest Woodward knows of, she said. This year’s cuts represent a 2 percent reduction in workforce for UMMC, which at 10,000 people is one of the state’s largest employers.

The scale of these cuts and the speed with which the medical center has had to deal with them has been a challenge, according to Woodward.

“Academic medicine and particularly this medical center, in a state that has financial challenges all the time, if you look back in the rearview mirror for the last 10, 20 years, you would see our financial situation is like a sine wave. There are never any really big ups and downs but a lot of moving along, bouncing along,” Woodward said.

“So we live on a very thin margin, and small things can really tip us one way or the other. We have had financial challenges for many, many years. … To my knowledge this is the first time that in the middle of a fiscal year we’ve received information about major cuts to our funding like this.”

The cuts affect all areas of the medical center. Each division head at UMMC was told they had to reduce the size of their budget by 5 percent.

“There really are no main areas,” Woodward said. “In fact, for us it was very important that this not be focused in any one single area because it is broad.”

Even with $24 million in cuts, however, Woodward said UMMC will need to find another $8 million in savings or increased revenues to close the gap. This could come in the form of grants or supply chain savings. But she said she knows it likely won’t be at the state level.

“The perfect world solution would be that we have funding that comes in from somewhere. We have received good support from the Legislature over the years. (But) they are so constrained by what’s happening in the state budget that I don’t think it’s a matter of if they would like to fund us more,” Woodward said.