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Lawrence & Memorial Hospital Lays Off 22 Employees

New London hospital says $3.2 million gap in fiscal year necessitates layoffs

Lawrence & Memorial Hospital has announced that it is laying off 22 full-time and part-time employees as part of its effort to close a $3.2 million budget gap.

Hospital spokesman Michael O’Farrell said the shortfall was part of the latest fiscal year, which began on Oct. 1. O’Farrell said the hospital attempts to close each year with a three percent profit margin in order to invest in new equipment and other upgrades. The Board of Directors instructed the hospital to take steps to close the budget gap before the end of the fiscal year on Sept. 30, 2013.

O’Farrell said the layoffs follow efforts to find savings in overtime, operational costs, and other expenses. Some open positions were closed and others were eliminated by attrition before the layoffs. A total of eight clinical positions—which involve interaction with patients—and 14 non-clinical positions were cut.

“This is not a step that was taken lightly,” said O’Farrell. “This is not an easy day here today.”

O’Farrell said the changing state of health care is requiring hospitals to cut costs and generate revenue. He said factors leading to the budget shortfall include Medicare cuts, drug shortages, the increasing cost of employee benefits, and lower inpatient volumes.

O’Farrell declined to specify which positions were being cut and which L&M facilities would be affected. He said the reductions were made across the board in different departments at the director level and below. No hospital services were cut as a result of the decision.

L&M’s effort to acquire Westerly Hospital's assets for $69 million was not a factor in the decision to reduce the workforce, O’Farrell said. He said he also does not anticipate that they will affect the acquisition process. L&M recently announced that it had completed regulatory filings with the state of Rhode Island and that completion of the transaction is expected in early 2013.

L&M will continue to look at further cost savings throughout the fiscal year. O’Farrell said these will focus on reducing the average length of stay, patient overtime, and both medical and non-medical supplies.

“The overall thing that we’re trying to do is provide the highest quality care at the lowest possible cost and that’s what’s driving everything moving forward,” said O’Farrell.

O'Farrell said there are approximately 2,500 full time equivalent positions at L&M facilities and that the workforce is about 3,000 when part-time positions are included.

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