Tufts Medicine lays off dozens of people after tough exercise

Tufts Medicine has laid off 70 people and eliminated 170 other vacancies as it struggles to recover from a tax-draining year.

The cuts, announced internally last week and confirmed on Monday, relate to business development, planning, administration and management across the health system. They will take effect at the end of the month.

The system — which has more than 1,100 beds and more than 13,000 employees across Tufts Medical Center, MelroseWakefield Healthcare, Lowell General and Tufts Medicine Care at Home — posted an operating loss of $398.6 million for the fiscal year ended in September. That loss was nearly equivalent to losses reported by the state’s largest health care system, Mass General Brigham, though Tufts is about one-seventh its size when comparing revenue from patient operations.

The cuts will save the health care system $22 million a year, officials said.

“There are financial challenges in the industry, including Tufts,” said David Storto, executive vice president and chief strategy and growth officer of Tufts Medicine. “We have worked hard to try to deal with those. Unfortunately, we had to make a difficult decision.

Leaders have previously said they were “watch everything” to address financial shortfalls largely caused by backlogs in transferring patients to other facilities, due to pandemic-induced staffing shortages, as well as an acute labor shortage that has forced systems to pay generously for temporary help. In addition, Tufts was strained last year by the installation of an electronic medical records system, which cost about $70 million.

The system has hired hundreds of people to fill vacant clinical positions, reducing its temporary labor costs, and is seeking to fill another 1,000 clinical positions. He also recently recruited a liver transplant surgeon, a new chair of surgery, a new chief of gastroenterology and an OBGYN as he supports clinical operations.

While most healthcare systems struggled financially last year, Tufts’ foundation appears to be a little more shaky than its competitors. According to figures in its latest unaudited financial statements, Tufts could continue to pay its bills for another 85 days if it no longer receives revenue. Systems with healthy debt ratings hold well over 100 days of cash. For comparison, Boston Children’s Hospital reported in a recent presentation that it has 729 days of cash.

For Tufts, the limited amount of cash on the balance sheet is concerning given the amount of debt the organization has.

“They have a lot of debt, they don’t generate enough cash from their operations to pay down the debt, and not enough cash to maintain their rating or pay down the debt. This is all pretty serious,” said Nancy Kane, a retired management professor in the Department of Health Policy and Management at Harvard TH Chan School of Public Health.

Given the financial difficulties, the leaders had worried about meeting certain measures required by bondholders over the next two years. But Storto said on Monday the system had improved its finances enough that it was now on track to meet its debt requirements.

Executives said the most difficult financial situation is due to years of lower commercial reimbursements compared to other systems, coupled with a higher percentage of government payers it serves, who traditionally reimburse at lower rates. to those of commercial insurance.

However, the financial outlook is improving, given hiring and plans to partner with a qualified nursing home to help discharge its patients, executives said.

“After the kind of year we’ve had in 2022, I’m definitely a lot more optimistic,” Storto said. “Everyone is starting to see a bit of improvement, and so are we. I feel a lot more confident in our performance to get back to something within the norm.

Jessica Bartlett can be contacted at jessica.bartlett@globe.com. Follow her on Twitter @ByJessBartlett.

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