“Significant” UM medical school cutbacks coming in May [The Miami Herald]

April 24--University of Miami President Donna Shalala announced Tuesday that the medical school will take "difficult and painful but necessary steps" next month to reduce costs, including staffing, primarily in "unfunded research and administrative areas."

In a letter to employees, she said there would a "significant reduction in costs" but included no details about how many employees might be laid off.

"The process will take place in stages, and affected employees will be notified during the month of May," she wrote. "Reductions will not impact clinical care or our patients."

Shalala said the cuts were necessary because "unprecedented factors -- like the global economic downturn which began in late 2008, decreased state and federal funding for research and clinical care, and tightening within the health insurance industry -- have had a detrimental impact on the school's finances. And we are not immune from the financial struggles of our partners at Jackson Memorial Hospital. Cutbacks in the annual operating agreement and reductions in volumes at UM/Jackson clinics have had a profound effect on our finances."

Jackson Health System, which has lost $419 million the past three years, cut its payments by $16 million this year, and next fiscal year is working on an entirely new basis for an operating agreement with UM that could mean far more drastic reductions.

"Let me reaffirm our continued commitment to our partnership with Jackson Memorial Hospital," Shalala wrote. " As we have always done, our priority is to ensure that future arrangements not only benefit the university, but also Jackson's long-term viability while meeting the needs of the people of Miami-Dade County."

Federal research dollars have been shrinking too, and UM researchers, like those elsewhere, have found themselves battling for grants.

Last August, the Herald reported that the medical school had received about $100 million in federal stimulus funds, which funded about 300 researchers for two years.

William Donelan, then the medical school's chief operating officer, told the Herald that not all those positions might remain after the stimulus funds ran out. Donelan also said then that the weakened economy meant fewer research funds were likely in the near future. "We are used to ups and downs," he said. "But we may be talking about a protracted period of down."

The medical school generally does not reveal its finances, but a UM financial report obtained by the Herald for the fiscal year that ended May 31, 2011, showed that the medical center enterprise -- including the school, research and clinical practices -- showed a surplus of $6.1 million. Clinical services showed a surplus of $88.4 million, while the school lost $82.4 million.

Last week, Jack Lord, the new chief operating officer of the medical school, said the school was preparing "to streamline our administrative operations" and a major reason for that was the "significant impact" of Jackson's financial problems.

Marcos Lapciuc, chairman of Jackson's board, told county commissioners he was "extremely offended" by Lord's statement and suggested UM's problems might be due to "investments that they have made that may or may not have panned out," including a 2007 purchase of Cedars Medical Center.

UM bought the 560-bed medical center, across the street from Jackson Memorial, for $275 million, and the university has been paying off that debt since then.

On Tuesday, Shalala listed the Cedars purchase as a positive: "Over the past several years, the university has made significant investments in its people, programs, technologies and facilities at the Miller School. We purchased the University of Miami Hospital and began to form the comprehensive, integrated UHealth system that is undeniably needed to provide top-tier clinical care in the years ahead. While we are seeing many positive results, there are also a variety of challenges facing the school, its partners and the health care industry as a whole."

Shalala did not mention specifically the timing of the Cedars purchase, but it came in 2007, and she noted UM's problems started in late 2008 with the economic global downturn.

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