Southcoast Health cutting dozens of jobs on heels of expensive IT upgrade

Mar 30, 2016, 11:25am EDT Updated Mar 30, 2016, 11:31am EDT

Stung by losses linked to costly technology upgrades, Southcoast Health is laying off 95 employees just a year after finalizing a similar staffing cut.

The cuts represent 1 percent of Southcoast’s 7,251 workforce, and will happen across the care provider’s three hospitals in Fall River, Wareham and New Bedford. All levels of hospital staff will be affected, officials said.
St. Luke’s Hospital, a part of Southcoast Health.

St. Luke’s Hospital, a part of Southcoast Health.

Southcoast employees were notified of the cut Wednesday morning. The cuts come as the hospital negotiates a merger with Care New England, a four-hospital system in Rhode Island.

The care provider said the cuts stemmed from training costs associated with the installation of a $100 million records system, known as Epic. Similar operating challenges have been reported by other Massachusetts care providers in the midst of Epic upgrades and installations.

Training costs for the system, which went live in October, contributed to a $9.9 million operating loss in the first quarter of fiscal 2016, which ended Dec. 31. Hospital executives said similar expenses have impacted the bottom line in the current quarter, which ends Thursday.

“These financial challenges are attributable to higher-than-budgeted operating expenses, largely a result of our Epic implementation,” said Southcoast president and CEO Keith Hovan, in a letter to employees. “During the first two quarters of this fiscal year, revenue has grown positively at a rate of 4 percent – a significant accomplishment, particularly given the lack of a flu season. However, expenses have grown at 6 percent during that time, which is an untenable variance that must be corrected.”

Hovan went on to ask employees for recommendations to reduce costs, going so far as to tell employees to reach out to him directly.

Southcoast has had a volatile financial run in recent years. It ended fiscal 2014 with a $30 million operating loss. In fiscal 2015, which ended Sept. 30, the hospital reported a $5 million operating gain.

Hospital spokesman Peter Cohenno said the layoffs have nothing to do with the Care New England merger discussions, adding that the hospital has more employees today than it did last year. Approximately 70 people were let go in October 2014, and another 35 were let go in January 2015.

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