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Thursday, July 28, 2011

Southern NH Medical Center to lay off 6 percent of workforce

NASHUA – Southern New Hampshire Medical Center will have to lay off up to 6 percent of its workforce and shut a unit that has 60 percent of the city’s beds for inpatient psychiatric cases because of funding cuts built into the state budget.

About two-thirds of those employees have been laid off in the last two weeks. The rest of the 100 employees will be pink-slipped by Sept. 1, said Tom Wilhelmsen, the hospital’s president and CEO, and Scott Westover, vice president for strategic management.

Wilhelmsen said the hospital will have to close its behavioral health unit on its west campus. Those 30 inpatient psychiatric beds represent more than 60 percent of the psychiatric beds in the city.

“Clearly, we’re very saddened by this,” Wilhelmsen said. “It’s going to affect good people, and obviously we don’t feel good about it.”

SNHMC is one of 10 New Hampshire hospitals suing the state, alleging that New Hampshire’s budget plan uses more than $200 million in Medicaid funds that should go to hospitals.

On Tuesday, Elliot Health Systems in Manchester laid off almost 200 people and shuttered Elliot On-Call, a 24-hour scheduling and advice hot line. The hospital has also frozen contributions to employee retirement savings accounts and altered policies on vacation time, said Doug Dean, Elliot’s president and CEO.

St. Joseph Hospital is also part of the suit, and will announce its own cuts in the next two weeks, likely including layoffs, said Melissa Sears, a hospital spokeswoman.

Southern New Hampshire Medical Center says it needs to cut about $10 million from its budget this year to pay what health care leaders say is a new 5.5 percent bed tax to the state. Since 1991, the state has used the payments to get a matching payment from the federal government. The state ended those reimbursements, called disproportionate share program (DSH) funding, as part of the two-year budget that went into effect on July 1.

“The state created a financial crisis for hospitals,” Wilhelmsen said. “On July 1, we were put in the red.”

The 5.5 percent bed tax is more than the hospital receives in reimbursements for what it spends on Medicaid patient treatment. Its loss turned a small operating profit into a 3 percent to 4 percent deficit, Wilhelmsen said.

Westover said the layoffs and program closures have to be completed by Sept. 1 because the hospital’s fiscal year begins Oct. 1.

The layoffs hit all areas of the hospital and associated primary care network called Family Medical Practice, Wilhelmsen said, including several managers.

The hospital is talking with other organizations in the community and police before closing the behavioral health unit, he said, and needs to design a way to take on some of those services at its main campus, he said.

“Our changes aren’t happening all in one day,” Wilhelmsen said.

On Monday, Elliot Health System, Southern New Hampshire Medical Center, St. Joseph Hospital and seven other hospitals filed suit against Nicholas Toumpas, commissioner of the state Department of Health and Human Services, claiming the two-year state budget improperly uses more than $200 million in Medicaid funds on non-Medicaid purposes.

The suit, filed in U.S. District Court in Concord, alleges the plan violates federal law and threatens “immediate and irreparable injury to the public.” It asks that the plan be halted immediately.

The suit is over whether lawmakers can keep the $115 million annually in so-called bed tax payments that hospitals make so the federal government will make a matching payment.

Greg Moore, the state House of Representatives policy director, said the bed tax payments aren’t Medicaid money because, by statute, they’re deposited into the uncompensated care fund. That fund is meant to reimburse hospitals for caring for uninsured patients and other charity care.

Since 1991, the state reimbursed the hospitals the bed tax payments once the state received the federal payment. This year, the Legislature decided to not only keep the federal money, but also the initial $115 million it collected from hospitals.

Joseph G. Cote can be reached at 594-6415 or Also, check Cote out on Twitter (@Telegraph_JCote).