A round of pay cuts was announced at UAMS today. They roll back -- for 3,300 employees -- merit pay raises granted at the beginning of the fiscal year July 1 or expected this year on employees' anniversary dates. (The hospital corrected an original estimate of 3,800 affected employees.)
The cuts will save $3 million dollars and thus save an estimated 50 jobs.
The cuts apply to employees of the University of Arkansas Medical Center staff, from administrators on down. That would, for example, include nurses. The cuts do not apply to doctors, who are employees of the medical school or the UAMS physicians group. Classified employees -- those who are in jobs paid under plans established across state government, such as police officers, electricians and administrative assistants -- also are exempted.
A spokesman said the cuts had been under discussion since before the arrival of new UAMS Chancellor Dan Rahn, who assumed his job a week ago.
"Dr. Rahn had been been discussing the challenges with [former chancellor Dr. Dodds] Wilson before he got here," Leslie Taylor said.
But she said the cuts were necessary to make revenues match expenditures.
UAMS is but another victim of the economy, Taylor said. There's been a change for the worse in the mix of paying patients and emergency room visits are up. So costs are up, but revenues haven't risen similarly. The campus also absored a $2.2 million loss in recent state budget cutting.
On the jump is a letter from Chancellor Rahn about the campus' financial situation. Here's the letter that went to employees today on the pay cuts from hospital director Richard Pierson.
From: UAMS Chancellor
Sent: Tuesday, November 10, 2009 10:53 AM
Subject: Financial Update
Dear UAMS Family,
First of all, thank you for the warm welcome you have shown my wife, Lana, and me these first few days here in Arkansas. Thank you also for the obvious dedication and pride you have in your institution. This pride is palpable – something I am now pleased to share with you. I have enjoyed meeting many of you this past week and will take every opportunity to meet those of you I haven’t in the coming months.
UAMS is on an upward trajectory with regard to all aspects of its core mission. I’m pleased with the expansion of our educational programs, the increase in our research funding, and the patient volume we are seeing with the opening of our new hospital and Psychiatric Research Institute. Students are learning at our new regional campus in Northwest Arkansas. It is only a few months until we open the new cancer institute addition. These are points of considerable pride.
With all of this growth we have encountered some financial challenges. We must operate within available resources and, at the present, that means we must reduce expenses. For the last several months, Dr. Wilson and I have been discussing the economic issues we are facing as an institution and developing a plan to address them. The first quarter of the current fiscal year, the institution ran an operational budget deficit. The majority of this is attributable to hospital expenses outstripping revenues.
While patient revenue is up, labor and supply costs are up more. There are multiple factors contributing to the imbalance, including a shift in payor mix, increased emergency room volume, and other causes related to the impact of the recession on our patients and families. This is exacerbated by UAMS’ $2.2 million state budget reduction and the possibility of more cuts if state revenues continue to decline.
We have communicated with UA President B. Alan Sugg and the UA Board of Trustees regarding our financial strategy for the future. To address the shortfall in clinical income vs. expense, hospital Director Dick Pierson and his leadership team have identified opportunities for reduction in personnel and non-personnel expenses and are implementing a cost reduction plan immediately.
Campus wide, we have involved senior leadership in implementing cost reductions, including a strict hiring review, not filling positions where work can be absorbed by existing staff, reducing supply utilization, travel costs and other incremental actions.
With your help, we will be good stewards of our resources, doing well and doing good at the same time. We must never forget that the people of Arkansas depend on us to shoulder the burden of society’s illness today and prepare for tomorrow. This institution works because of you - the faculty, the staff, the students, the administrators – and your support of our common greater purpose.
Dan Rahn, Chancellor