Regents say layoffs designed to save UTMB

November 26, 2008 10:00:00 PM PST
The University of Texas Medical Branch in Galveston was already in financial distress before Hurricane Ike's devastation and laying off 3,800 people is designed to keep the state's oldest medical school from going bankrupt, officials said. [SIGN UP: Get headlines and breaking news sent to you]

The UT Board of Regents unanimously approved the cuts Wednesday during a meeting in El Paso, saying they want to keep the medical school in Galveston but could not allow it to continue losing as much as $40 million a month since Ike hit the island in September.

"The (financial) model at UTMB was not working before the hurricane," regents vice chairman Robert B. Rowling said in a story in Wednesday's online edition of the Houston Chronicle. "There were going to have to be some drastic changes."

UTMB is the largest employer and a driving economic force in the area, said Tom Johnson, executive director of the Texas Faculty Association, the union representing faculty there.

"This announcement was a disastrous error," Johnson said Thursday.

Ike caused nearly $710 million in losses to UTMB, which has 12,500 employees with 8,000 working on the island campus. Officials have said that only about $100 million of the damage from the Sept. 13 hurricane is covered by insurance.

Some of UTMB's 85 buildings were inundated by up to 8 feet of water. The hospital's kitchen, blood bank and radiology department were virtually destroyed.

But UTMB's future had been in question long before that.

It receives money from patient care and contracts for providing care to people without health insurance and to prisoners, along with funding from the UT system. But it has lost money on the indigent-care program -- as much as $59 million in fiscal 2008 -- and the hurricane only exacerbated the problem.

Dr. Kenneth Shine, interim chancellor of the UT system, expected most of the jobs cut would come from John Sealy Hospital, the island's only hospital. Shine was optimistic that most of those laid off would find work at other health care institutions.

Regents asked Shine to give priority to hiring laid-off UTMB employees at other UT institutions and provide placement services to help them find jobs. A retirement incentive package may be offered, as well.

According to The Galveston County Daily News' online edition Thursday, employees targeted for layoffs will receive pay until mid-January to help them through the holidays, said Shine. By the middle of next week, medical branch officials will begin unveiling a detailed plan and notifying employees about their job status.

Many of those being laid off have been helping get the hospital functioning again, Johnson said.

Though difficult, Wednesday's announcement should help employees plan their futures, Shine said. Some medical branch employees whose houses were damaged have called Shine asking if they should rebuild or use insurance money to move on, he said.

"This is tough; this has been on my heart and mind for some time," said Dr. David Callender, medical branch president. Callender traveled to El Paso on Wednesday afternoon to meet with the governing board.

"The regents had no choice if the organization was to go forward and be able to make it financially," Callender said.

However, some see ongoing consequences from the layoffs at Galveston's largest employer.

"Scaling back at UTMB Galveston, slashing services and changing the role it plays in providing health care to all Texans will have a devastating impact," Judy Lugo, president of the Texas State Employees Union, told regents. She said regents could have found alternatives to layoffs and cutting services.

Regents offered reassurance that the 117-year-old institution would remain in Galveston and not move to Austin.

After the storm, the medical branch was forced to place hundreds of third- and fourth-year students at other hospitals and Texas A&M students are finishing the semester in College Station.

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