About 500 employees of the University of Pittsburgh Medical Center are being laid off this week as part of the health system's ongoing cost savings initiatives. "We are preparing to do business in a worsening economy," said spokesman Paul C. Wood.
The layoffs are "almost entirely nonclinical, administrative and managerial positions" and are occurring systemwide, he said. UPMC employs about 50,000 workers, and, despite the layoffs, it expects to hire more than 3,000 new employees this year.
The layoffs are effective immediately.
"This is about taking steps to integrate functions, to realize some operational efficiencies and redesign some programs," Mr. Wood said, adding that "we have a very generous severance package." The reduced payroll is part of UPMC's previously announced decision to reduce growth in its salary-related costs from 10 percent to 5 percent this year.
Mr. Wood said UPMC was on solid financial ground. "We are probably one of the most healthy companies in the country right now."
But, he added, "As the economy worsens, we're taking some proactive steps to ensure that the growth in our expenses does not outpace our growth in revenue."
In August, UPMC reported it made a $5 million profit in fiscal 2008, compared with a record-setting $612 million the year before. Investment returns for the 12 months that ended June 30 were negative $128 million, after a $403 million gain the previous year.
UPMC's cash flow of $513 million in fiscal 2008 was down only about 1 percent from $520 million the year before.
UPMC is expected to release its first-quarter financial report for the current fiscal year today.
The current economic turmoil has hospitals across the state re-evaluating their operations, particularly smaller hospitals and hospitals with large investment portfolios.
In September, Sacred Heart Hospital in Allentown, Lehigh County, announced it was laying off 96 employees, eliminating 39 positions through attrition and transferring 15 workers to other positions. Other employees had their hours reduced in the hospital's bid to save $5.7 million annually.
A Lehigh Valley children's psychiatric facility, KidsPeace, eliminated 30 positions last month, the only other Pennsylvania hospital disclosing recent layoffs, according to the Hospital and Healthsystem Association of Pennsylvania.
Also this week, Cleveland-based National City Corp., which has 1,800 employees in the seven-county Pittsburgh region, announced plans to eliminate 4,000 jobs. Nationally, the Labor Department reported yesterday that the number of Americans filing new claims for unemployment benefits rose last week by 15,000 to a larger-than-forecast 478,000.
Steve Twedt can be reached at email@example.com or 412-263-1963.