Pittsburgh Mercy Health System became the latest health care institution in the region to react to financial pressures by eliminating 27 supervisory and management positions yesterday, including the termination of 12 workers.

The region's third-largest health system, a unit of suburban Philadelphia-based Catholic Health East, said the reductions followed an operating loss in its most recent fiscal year and were part of a campaign to lower costs and improve revenue.

Pittsburgh Mercy also said it would eliminate its pediatric residency program, ending the financial stipends it provided to physicians who teach various pediatric specialties. It said it also would discontinue the pediatric specialty clinics it runs and its pediatric intensive care service once the 19 residents in the programs complete them.

The health system said it also would evaluate other services and attempt to renegotiate contracts with insurers.

Pittsburgh Mercy, whose chief executive officer resigned abruptly in October, said its board and administration "have to take swift action to return PMHS to profitability."

After three consecutive years of profits, Pittsburgh Mercy said its most recent fiscal year, which ended Dec. 31, resulted in a $25 million operating loss. The loss, which came on annual revenue of $393.3 million, included $5 million in one-time costs associated with the shutdown late last year of Mercy Providence Hospital's emergency room and medical units. Mercy Providence, one of three hospitals in the system, now serves only psychiatric and substance abuse patients.

Pittsburgh Mercy blamed the deficit on Medicare reimbursement curbs, inadequate Medicaid payments, high costs for malpractice coverage and an increase in the share of overall Medicare payments coming from managed care plans, which pay less than traditional fee-for-service Medicare.

In its most recent financial survey of hospitals, the Pennsylvania Health Care Cost Containment Council reported last week that 48 percent, or nearly half of the hospitals in the state, posted net losses for fiscal 2003, which ended Dec. 31 for most institutions. That was up from 42 percent in 2002 and 34 percent in 2001.