The University of Arkansas for Medical Sciences will eliminate 124 more jobs, suspend a $45 million maintenance plan and make several other spending changes, the academic hospital's head of finance said Friday as officials addressed UAMS' budget crisis.
The new round of cuts will be made through attrition rather than layoffs and will raise the number of eliminated positions to 730, officials said at a specially called University of Arkansas board of trustees committee meeting nearly two months after UAMS laid off 258 workers and cut 600 jobs. The new total represents about 6.6 percent of the 10,900-person workforce.
UAMS is on track to finish the fiscal year ending June 30 with a budget deficit "no worse" than $39 million, the level that trustees authorized and nearly half the $72 million deficit projected at the time of the Jan. 8 layoffs, said Bill Bowes, senior vice chancellor for finance and administration.
The higher estimate would have drained all but about $5 million from the reserve account that officials can readily access. Bowes expects to have a "very clear picture" about the financial situation when February's numbers are finalized and presented to trustees in March, he said.
"We have, I think, accomplished a great bit in just about three months' time," interim Chancellor Stephanie Gardner said. "I think we have turned a corner, but it is incredibly important for our employees, faculty and staff to understand the message, that we're making progress."
Trustee John Goodson, who called for monthly meetings about the academic hospital's finances, asked that officials talk more about the effect of the cuts at the next presentation.
"We don't talk about what services we eliminated or what we can't provide as a result [of the cuts]," Goodson said. "If the answer is none, then we weren't lean enough. ... So we need to answer that question, and we need to be more transparent about what we had to eliminate."
Gardner said the potential effect of job cuts to revenue streams "can't be dismissed" and that officials have to "very carefully look at" the ramifications.
"We're having these very tough discussions for hours each week about what positions are most critical," Gardner said.
An estimated 80-100 employees leave UAMS every month, and all vacant positions are being reviewed before they are refilled, said Leslie Taylor, vice chancellor for communications and marketing. Jobs "critical to our mission" will be staffed, she said.
UAMS has operated on a deficit budget for three of the past four years, drawing from its unrestricted net assets to cover the difference between spending and income. That account had $154 million as of June 30, 2013; if the current deficit forecast holds, it will fall to about $38 million at the end of this fiscal year.
Goodson also requested comparisons to academic medical centers in neighboring states that include, among other things, the levels state funding at those institutions.
The state funded UAMS at a high of $120 million in fiscal 2014, but of late, funding is $107 million to $108 million, and about $21.5 million of that is "pass-through or designated" funding, leaving UAMS with about $86 million.
"I want the board and the public to see exactly how we stack up among our surrounding states," Goodson said.
To address the budget woes, UAMS is targeting at least $93.6 million in combined additional revenue and reduced spending in fiscal 2019, which begins July 1, Bowes said. Most of that, about $54.4 million, would be savings from the eliminated jobs.
The plan also includes $1.4 million in savings from reorganizing clinical trials, a $1 million cut in equipment spending and a $2 million cut to the travel budget, according to Bowes' presentation.
The hospital anticipates saving $28 million from increased efficiency based on what an outside firm, Chicago-based Huron Consulting Group, has estimated, he said.
Shelving a $45 million maintenance plan that was scheduled to begin in the current fiscal year will save $4 million a year, Bowes said. Taylor said the board of trustees previously authorized UAMS to obtain loans to cover work and repay them over a period of up to 10 years, but that won't be pursued at the moment.
"This is work we will need to do at some point, but we don't feel like this is something we should undertake right now," Taylor said.
Urgent maintenance, such as a leaky roof, will be addressed. But $25 million in equipment projects and $5.8 million in work at the UAMS Central Building are among the items that will be delayed.
Officials are also considering, but have not finalized, a host of other changes that would add on to the $93.6 million in projected savings and increased revenue. Among them are potential changes to employee benefits, such as long-term disability and paid leave, Bowes said.
UAMS' benefit package exceeds those offered at other Arkansas health care institutions, but it is similar to other teaching and research hospitals in neighboring states, Gardner said.
Trustees expressed concern that reducing benefits could frustrate workers who are already shaken by the ongoing cuts. Sheffield Nelson, of Little Rock, cautioned against "misleading ourselves" on how such reductions would be received.
"I think people may be a little more upset than you might think once it's taken away from them and they realize it," Nelson said.
Dr. Richard Turnage, vice chancellor for clinical programs and chief executive of the UAMS Medical Center, said changes to long-term disability benefits could prompt "dissatisfaction," but he said it is typically ranked lower than other benefits, like health insurance and retirement, by employees.
"I think that the faculty -- it's just now beginning to be discussed -- and so I think the faculty by and large aren't aware of this yet," Turnage said. "There will certainly be some dissatisfaction. But I think also, given the things that we've gone through and the issues we face, I think people understand we have to look at things like this."
Information for this article was contributed by Aziza Musa of the Arkansas Democrat-Gazette.
A Section on 02/24/2018
Print Headline: UAMS to erase 124 more slots, slash spending; Jobs to go by attrition; cuts will halve deficit, exec says