Detroit Medical Center To Consider Layoffs, Employee Benefit Reductions To Decrease Financial Losses, CEO E-Mail States
Detroit Medical Center, the Detroit region's largest provider of indigent care, will reduce employee benefits and institute layoffs among its 13,000-person workforce if the health system's financial situation does not improve, according to a companywide e-mail sent by interim CEO Gwen MacKenzie on Wednesday, the Detroit News reports. The e-mail states, "Volume must improve at all sites, or the work force will be adjusted in line with patient activity. Some of DMC's employee benefits are significantly beyond what other local health systems are offering. Therefore, a review and restructuring of the benefit package is under way." The e-mail also states that DMC will complete planned sales of five Detroit-area clinics in order to further reduce financial losses. MacKenzie -- in her first day as a replacement for former CEO Dr. Arthur Porter -- wrote that those measures are necessary as the system's revenue has dropped because of a lower number of patients (Hall, Detroit News, 10/2). Porter, who became CEO in 1999, on Aug. 13 resigned from his position and said he would step down on Sept. 30. During his tenure, Porter eliminated about 6,000 jobs, sold clinics and consolidated hospitals to improve DMC's financial status. Despite the reductions, DMC has continued to face financial losses (Kaiser Daily Health Policy Report, 8/18).
Financial History
The health system lost more than $100 million last year and has lost $400 million over the past six years, according to the News. DMC Treasurer and interim Chief Financial Officer Chris Palazzolo said the system loses about $12.6 million per month. Detroit Receiving Hospital and Hutzel Women's Hospital account for about $5.1 million of the losses; that amount is covered under a recent $50 million in emergency funding agreement with the city, county and state governments (Detroit News, 10/2). Under that agreement, reached in July with Michigan and local governments, DMC will receive $50 million in city, county, state and federal Medicaid matching funds to prevent the planned layoffs and service reductions at the facilities (Kaiser Daily Health Policy Report, 8/18). DMC officials did not comment on the memo, and DMC Board Chair Chuck O'Brien was not available for comment, according to the News (Detroit News, 10/2).
