UMC of El Paso lays off 56 due to budget problems

University Medical Center laid off 56 employees Friday morning due “mounting budgetary pressures,” according to a statement released to ABC-7 by UMC.

The areas impacted by the reduction in force include support and ancillary staff as well as management.

Those who have been laid off will receive severance pay and payment for accumulated vacation time based on hospital policy.

UMC says a hiring freeze has not been implemented.

“It is with a very heavy heart that I must tell you that UMC had to reduce the size of our workforce today,” said UMC President & CEO James Valenti in a message to staff. “This is the first time in my 10 years with the Hospital District that we have been forced to eliminate positions. Please know that this action is in no way a reflection of your work. Each of you has contributed so much to our incredible transformation during the last decade. Our patient volumes are at record highs as are our patient satisfaction scores. Our quality measures have exceeded our goals. Our payer mix and market share are both up and UMC’s cash collections have never been higher. You accomplished all of that and I am so appreciative of your efforts, which is why this decision was so very difficult.”

The statement says “the hospital’s positive momentum has not been enough to overcome the budgetary pressures it faces as a result of the investments it has made in El Paso Children’s Hospital that have yet to be repaid.”

UMC implemented a series of cost-cutting measures early this year to conserve its cash-on-hand to begin addressing those issues:

The Medical Center halted all but emergency capital acquisitions
Reduced overtime
Eliminated open positions
Reduced many other overhead and supply expenses.

UMC says that those actions were not enough and other cost-cutting initiatives have been identified and will be presented to the UMC board during final budget preparations later this month.

UMC’s Board and administrative team continue to negotiate with their counterparts at El Paso Children’s Hospital regarding repayment terms.

El Paso County Judge Veronica Escobar released the following statement:

“Today, University Medical Center announced a reduction in force that was a result of budget challenges they are experiencing. The Commissioners Court will be meeting with the hospital district management team and board of managers in the coming weeks to discuss the FY2015 budget where we will learn more about the challenges UMC will face in the coming year — challenges that are coming from a number of different directions. Budget reductions and decisions like these are always painful. We at the County are familiar with the process as we have had to make our own reductions in the past – three years in a row. However, I am confident that the world-class service and compassionate care that UMC has come to be known for will continue despite these staffing reductions.”

Valenti will go before Commissioners Court on Aug. 4 and ask for approval of a $20 million line of credit.

“Our cash reserves dip in the month of October and November and we need a line of credit to add to our reserves,” Valenti said. “It will allow them to cover payroll, accounts payable, The line of credit is only for this year. It will cover October and November and we will pay it back in December, January – within 90 days.”

UMC’s board on July 8 authorized the hospital to pursue $60 million in credit lines, known as a tax anticipation note from Wells Fargo, over the next two years.

That will allow it to have some cash flow until it gets tax revenue.

The board authorized UMC to borrow up to $25 million through the rest of 2014 and $35 million in 2015, with an interest rate of 1.57 percent.

The hospital won’t necessarily access all of the money in the credit.