Local News

Duke University Health System To Eliminate 300 Jobs

Posted May 1, 2002 11:50 a.m. EDT

— Duke University Health System will eliminate up to 300 jobs in response to increasing budget pressures caused by cuts in federal and state reimbursements, officials announced Wednesday.

The officials said the cuts would not adversely affect patient care and emphasized that DUHS would assist affected employees in finding new positions, where possible. The cuts are projected to equal about 3 percent of Duke University Health System's 10,000-person work force.

DUHS is a leading provider of charity health care in North Carolina, providing more than $35 million in unreimbursed charity care this year.

The announcement follows similar reports of cutbacks at leading teaching hospitals around the country.

"DUHS, like other academic health centers and hospitals, is facing increasingly difficult budget pressures. We must take steps to maintain our status as the premier health care provider for our patients as well as meet the health needs of our community," said William Donelan, DUHS executive vice president.

Donelan said the 300 positions would be in addition to approximately 100 others that will be eliminated through attrition.

"We are still in the early stages of determining what positions might be eliminated, but we know they will be in areas that will not adversely affect patient care," he said.

Donelan noted that the focus of the staff reductions would be in areas in which the work force exceeds DUHS's internal standards, such as the Patient Revenue Management Organization and some areas within Duke University Hospital, the largest of the three hospitals in the health system. The other hospitals that comprise DUHS are Durham Regional Hospital and Raleigh Community Hospital.

During the last five years, DUHS has absorbed more than $200 million in cuts as a result of the federal government's Balanced Budget Act of 1997. In addition, DUHS expects the current state budget crisis to result in further reductions in Medicaid reimbursements in the next fiscal year (FY03). These cuts are expected to total as much as $25 million for DUHS. Federal cuts in allowances for teaching activities will cost an additional $6 million. In addition, Duke has faced rapidly increasing costs for pharmaceuticals and insurance, the latter due partly to the Sept. 11 tragedy.

"We can do little to change government reductions in reimbursement or increases in drug costs and, therefore, must look to take further expenses out of our operating budget," said Donelan. "The decision to consider reductions in staff comes only after careful consideration of alternatives. Once we know what positions will be eliminated, we will work with affected employees and attempt to redeploy them within DUHS or Duke University."

The health system already has implemented numerous significant cost-saving measures, Donelan said. These include changes in procurement efforts that have saved more than $16 million in office and other supplies, reductions in travel, efforts to reduce temporary labor and a more stringent hiring-review plan.

Duke has modernized its billing practices to capture more revenue faster. "But all of these positive steps are not sufficient to compensate for the volatility and cuts in government reimbursements," Donelan said.

He said the job cuts, combined with previous cost-saving efforts, will enable DUHS to "continue providing outstanding patient care and have the financial foundation to serve our community and invest in the future."