Grady Health System, facing a $17 million shortfall, is cutting 120 jobs, according to an internal memo obtained by Georgia Health News.
Reasons for the job cuts, as stated in the memo from Mark Chastang, Grady’s chief operating officer, include reduced state and county funding to the hospital; a weak economy with high unemployment; and increasing costs of supplies, utilities, pharmaceuticals and labor.
“We are not eliminating any programs as part of this reduction in the workforce,’’ the memo said. “That means we are not discontinuing any services.’’
The job reduction represents about 2 percent of Grady’s workforce. Most of the jobs will occur at Grady Memorial Hospital, the hub of the Grady system and a huge provider of medical care to the metro area’s uninsured and indigent population.
Grady is without a CEO after the departure of Michael Young, who recently left after three years at the 953-bed facility in Downtown Atlanta. Young was credited with spearheading a financial turnaround.
Grady is conducting a national search for his replacement.
The $17 million shortfall comes only four months into the current fiscal year, the June 13 memo to employees said. “We must act now to correct this imbalance,’’ the memo said.
The memo also said Grady would perform an overall review of jobs; reduce overtime; improve its billing capabilities related to its new computer system; and cut expenses in its services to inmates of the City of Atlanta and Fulton and DeKalb counties.
“We are demonstrating to the community and to each other just how committed we are to high quality patient care and to doing what is necessary to ensure Grady’s continued move forward along the road to financial stability,’’ the memo from Chastang said.
Grady is the second major health system in Atlanta to announce job cuts within a week. Last Thursday, Piedmont Healthcare said it was reducing its job count by 464 positions.
The current job reduction at Grady comes on top of a cut of roughly 70 positions in February.
Grady spokesman Matt Gove said Tuesday that in large part, the financial distress that Grady is experiencing is similar to that of other Atlanta and Georgia hospitals.
But Grady has also faced a reduction in its funding from Fulton and DeKalb counties of $6 million, and a cut in Indigent Care Funds of $13 million.
Gove said that Grady’s admissions are down or flat for inpatient care, outpatient services and at its neighborhood clinics.
At the same time, more people have postponed medical care because of the economic downturn, which has led to an increase in emergency room volume, he said.
“Our volumes are driven by the economy to the most expensive place you can see somebody — the emergency room,” Gove said.
He said the financial situation forced Grady to act. “If we don’t act quickly now, the path we’re on is unsustainable,” he said. “By acting quickly, we can make Grady strong.”
Grady recently closed two neighborhood clinics and raised prescription co-pays. The health system cited lower amounts of funding from Fulton and DeKalb as the reason.
Grady Memorial Hospital has come back from the financial brink in the last four years, aided by corporate and financial support and new management.
In the March announcement of Young’s departure, Grady said it had achieved an operational turnaround of more than $75 million, while providing an added $42 million in indigent care.
The Greater Grady Capital Campaign has helped raise more than $300 million for facility improvements and new equipment, the announcement said.