A $25 million reduction in government funding to pay for the poor and uninsured is forcing Grady Memorial Hospital to look at cuts, including layoffs, though doctors and nurses won't be among them, hospital officials said.
Labor accounts for roughly 50 percent of total costs, CEO Michael Young said. Among other things, Grady will look to boost revenue by a couple of million dollars and make about $10 million in cuts, Young said.
“There isn’t much fat left,” he said. “This is going to put us into cutting a little meat, cutting a little bone.”
Grady will receive around $63 million from the state Indigent Care Trust Fund this year, down from $88 million in 2010, hospital spokesman Matt Gove said.
Young didn't say which departments would be hit by the layoffs or how many workers would be impacted.
Part of the staffing cuts will likely include temporary and contract workers who were brought in to set up the hospital’s new electronic medical record system, Young said. He added that any layoffs will likely happen over the next several weeks.
The amount hospitals receive from the indigent care fund, which is federal money administered through the state, is based on how much indigent care is provided versus payments received, Gove said. “$25 million to a hospital that pretty much operates at break even, that’s a lot.”
In Grady’s case, 2009 was used as a baseline; however, the hospital had a major turnaround that year fueled in part by renegotiating contracts with vendors and suppliers and a $57 million increase in cash collections, he said. The hospital also received private donations -- totaling more than $300 million in commitments -- which were used to buy new, more efficient equipment, he said.
The indigent care fund doesn’t fully cover the cost of treating indigent patients and likely never will, Gove said.
Fulton County also has reduced its allotment of funds to Grady this year, by about $3 million, to $52 million, he said, and DeKalb County is still working on its budget. Grady spends between $200 million and $300 million annually on uncompensated care.
“Grady is in the unfortunate position of while [funding] keeps shrinking, we’re still seeing patients,” Gove said.
The hospital’s board of directors will discuss potential cost-saving measures, including layoffs, at its meeting on Monday, Young said.
Young said the hospital operated beautifully last year at this time with slightly more than 4,400 employees, and he would like to get back closer to those levels.
The hospital has added about 300 employees in the past year, though some of those are needed because of new services, such as 50 nurses who work in Grady’s Marcus Stroke & Neuroscience Center, he said.
The number of layoffs will not be anywhere close to the 300 mark, Young emphasized.
The hospital board also will be discussing other areas where the lost funds can be made up, he said. “It’s what every hospital is doing right now.”