Up to 800 people will lose their jobs under a major restructuring at the University of Miami medical school, President Donna Shalala said Tuesday.State budget cuts, less research money, lower compensation from insurers and cutbacks in payments by Jackson Health System made the changes necessary, Shalala said during a meeting at the Miami Herald.
“It’s not a great situation,” Shalala said, “but at the end of the day, we’ll be a much stronger healthcare system of a much higher quality because we will be able to reinvest in healthcare delivery. … We’ve moved this institution to new heights. The world is changing beneath our feet.”
Laid-off workers are being notified this month, Shalala said. A notice UM filed with the state Tuesday announced the university would cut 800 jobs by July 31, but Shalala said the final number is likely to be lower. The cutback is the largest by any employer in the state since the medical school’s campus neighbor, Jackson, announced 920 layoffs in February.
The UM reduction amounts to 8 percent of the medical center’s 10,000-person workforce. Shalala said no doctors or nurses who provide clinical care would be affected. The cuts announced Tuesday come after 182 temporary workers were laid off in late March.
Most of the UM layoffs are concentrated in research and administration as the university centralizes services to serve the entire enterprise. About 150 people who schedule appointments will lose their jobs in various departments as that service is centralized. About 150 in research administration and 110 researchers will also be let go, according to the letter UM filed with the state.
This year, the medical school lost about $8 million in state funding, a spokeswoman reported. It also lost $16 million in payments from Jackson.
Recently consultants from PricewaterhouseCoopers were brought in to study the medical school operation, finding duplication in administrative jobs. “We are going to actually take — from top to bottom — a whole layer out,” Shalala said.
Unfunded research programs are also being slashed. Shalala said this is a national problem for all medical schools, because more researchers are applying for research grants, meaning fewer are funded.
“What we’ve chosen to protect is patient services,” Shalala said. “Nothing that we’re doing will affect the education of our students or the quality of the healthcare. In fact, what these moves will allow us to do is to improve the quality of healthcare at our hospitals, in our clinics and assure us that we can recruit and retain the finest healthcare professionals in the country.”
Shalala acknowledged that UM leadership had heard intense objections from the faculty. The agenda for a faculty council meeting scheduled for Tuesday evening included two dozen topics including “explanation for such short notice for drastic changes” and “lack of faculty notification or involvement.”
Steve Green, a biology professor and former head of the UM faculty senate, said that although the administration believed it had been transparent and forthcoming in deciding on cutbacks, his colleagues in the medical school told him they found the process “mysterious” and were angry that it was done by outsiders who weren’t experts in research and looked only at numbers. “That’s what’s irritating people. That’s the major cause for the morale crisis,” he said.
Shalala, who has led institutions of higher education for a total of 24 years, said she’s accustomed to dealing with complaining faculty when she tries to make changes. “There is nothing I haven’t heard before.”
Pascal Goldschmidt, dean of the medical school, said that all the decisions were based on national standards for most effective research standards. Jack Lord, the medical school’s new chief operating officer, said the consultants made recommendations, but university leadership made the final decisions.
Some critics have long warned about looming disaster at the medical school. Last October, car dealer Norman Braman, a long-time UM trustee who has donated more than $5 million to the university, wrote a scathing letter to Leonard Abess, chairman of the board, complaining that “poorly conceived decisions by the medical school administration have put the university at significant risk. … In the ‘for profit’ world, administrators would have already been fired for repeatedly failing to perform according to stated goals. Unfortunately, this is not the case at UM where people are instead given bonuses and raises as the university gets weaker and weaker.”
Braman — who later resigned from the board — attached to his letter a list of projections that UM executives gave trustees before the university purchased the 560-bed Cedars Medical Center in 2007 that predicted the hospital would produce a net surplus of $44 million by 2011 and $58 million by 2012.
In fact, the medical school’s monthly financial report, obtained by the Herald, showed that UMH, the former Cedars, showed a surplus of $4.8 million for the first 10 months of this fiscal year.
Shalala responded to Braman’s criticisms Tuesday, saying that “everybody is entitled to their own opinion,” but she noted that “UMH is solvent” and helping pay for educational and research losses at the medical school.
Overall, UHealth, the clinical enterprise, had a surplus of $61.8 million, while the Miller School of Medicine, including the teaching and research efforts, showed a loss of $79.8 million. The entire medical center enterprise had a loss of $17.9 million for the 10-month period.
For UM administrators, the problem is that the medical school was expected to produce a surplus of $25 million for the year, to help fund overall university operations. That means the medical center was $43 million behind expectations.
Joe Natoli, UM’s chief financial officer, said the university has invested considerable amounts in the hospital and clinical practices and expects them to produce major paybacks.
Still a major concern for the UM leadership is Jackson, Miami-Dade’s healthcare safety net for the poor and uninsured, which has lost $419 million the past three years. Lump-sum payments to UM have dropped from $130 million in fiscal 2010 to $114 million in fiscal 2011. The two organizations are now struggling to craft a new kind of annual operating agreement, with Jackson “leasing” UM doctors, rather than making lump-sum payments to the university.
Both sides agreed to have that arrangement in place by June 1, the start of UM’s fiscal year, but negotiations have dragged on.
Last week, at a meeting of the Jackson board, Goldschmidt begged Jackson executives to determine by June 1 how much they plan to pay UM during its new fiscal year. “We just cannot carry on without that information.”
Jackson Chief Executive Carlos Migoya said his team was working on the issue, but didn’t offer specifics.
Shalala said Tuesday she’s confident the deal with Jackson will get done. “We don’t want to complain about this relationship. We’ve got to make it work.”
But the extent of that relationship is still unclear. Last month, the University of Miami Hospital applied to state regulators for permits to create adult transplant programs for heart, liver, kidney and lungs. For decades, those have been premiere specialties that UM doctors have performed at Jackson Memorial.
Shalala said UM is committed to working with Jackson on transplants, but it seeks “flexibility” for the future on how to best handle long-term transplant patients, particularly if Jackson decided to drop some of the transplant programs.
On Tuesday afternoon, Jackson’s Migoya sent a letter to board members and county leaders saying he hoped Jackson and UM can continue being partners in transplants, but “we will take all necessary steps to protect this unmatched program from being diluted by competitors who cannot offer the same level of care. Regardless of the actions taken by other hospitals, Jackson is completely devoted to preserving and expanding our transplant service.”