Arkansas Blog: Pay cuts at UAMS

A round of pay cuts was announced at UAMS today. They roll back -- for 3,300 employees -- merit pay raises granted at the beginning of the fiscal year July 1 or expected this year on employees' anniversary dates. (The hospital corrected an original estimate of 3,800 affected employees.)

The cuts will save $3 million dollars and thus save an estimated 50 jobs.

The cuts apply to employees of the University of Arkansas Medical Center staff, from administrators on down. That would, for example, include nurses. The cuts do not apply to doctors, who are employees of the medical school or the UAMS physicians group. Classified employees -- those who are in jobs paid under plans established across state government, such as police officers, electricians and administrative assistants -- also are exempted.

A spokesman said the cuts had been under discussion since before the arrival of new UAMS Chancellor Dan Rahn, who assumed his job a week ago.

"Dr. Rahn had been been discussing the challenges with [former chancellor Dr. Dodds] Wilson before he got here," Leslie Taylor said.

But she said the cuts were necessary to make revenues match expenditures.

UAMS is but another victim of the economy, Taylor said. There's been a change for the worse in the mix of paying patients and emergency room visits are up. So costs are up, but revenues haven't risen similarly. The campus also absored a $2.2 million loss in recent state budget cutting.

On the jump is a letter from Chancellor Rahn about the campus' financial situation. Here's the letter that went to employees today on the pay cuts from hospital director Richard Pierson.

From: UAMS Chancellor
Sent: Tuesday, November 10, 2009 10:53 AM
Subject: Financial Update

Dear UAMS Family,

First of all, thank you for the warm welcome you have shown my wife, Lana, and me these first few days here in Arkansas. Thank you also for the obvious dedication and pride you have in your institution. This pride is palpable – something I am now pleased to share with you. I have enjoyed meeting many of you this past week and will take every opportunity to meet those of you I haven’t in the coming months.

UAMS is on an upward trajectory with regard to all aspects of its core mission. I’m pleased with the expansion of our educational programs, the increase in our research funding, and the patient volume we are seeing with the opening of our new hospital and Psychiatric Research Institute. Students are learning at our new regional campus in Northwest Arkansas. It is only a few months until we open the new cancer institute addition. These are points of considerable pride.

With all of this growth we have encountered some financial challenges. We must operate within available resources and, at the present, that means we must reduce expenses. For the last several months, Dr. Wilson and I have been discussing the economic issues we are facing as an institution and developing a plan to address them. The first quarter of the current fiscal year, the institution ran an operational budget deficit. The majority of this is attributable to hospital expenses outstripping revenues.

While patient revenue is up, labor and supply costs are up more. There are multiple factors contributing to the imbalance, including a shift in payor mix, increased emergency room volume, and other causes related to the impact of the recession on our patients and families. This is exacerbated by UAMS’ $2.2 million state budget reduction and the possibility of more cuts if state revenues continue to decline.

We have communicated with UA President B. Alan Sugg and the UA Board of Trustees regarding our financial strategy for the future. To address the shortfall in clinical income vs. expense, hospital Director Dick Pierson and his leadership team have identified opportunities for reduction in personnel and non-personnel expenses and are implementing a cost reduction plan immediately.

Campus wide, we have involved senior leadership in implementing cost reductions, including a strict hiring review, not filling positions where work can be absorbed by existing staff, reducing supply utilization, travel costs and other incremental actions.

With your help, we will be good stewards of our resources, doing well and doing good at the same time. We must never forget that the people of Arkansas depend on us to shoulder the burden of society’s illness today and prepare for tomorrow. This institution works because of you - the faculty, the staff, the students, the administrators – and your support of our common greater purpose.

Dan Rahn, Chancellor

Comments

Why are we opening a new medical school in NWA if we can't even afford the one we already have?

Posted by: tb0213 | November 10, 2009 02:46 PM

I'm sorry but someone please explain why it is OK to cut the pay of nurses and not doctors also. Another sterling example of how broken and irrational our health care system has become. Start cutting pay at the top and more than 50 jobs would be saved. Most of the docs are among the highest paid in the state. Why not lead by example instead of picking on the lower paid having little choice other than sucking up their pay cut.

Posted by: downtowner | November 10, 2009 02:55 PM

Meanwhile, Blue Cross profits soar.

downtowner, when vacancies start showing up in nurses ranks, doctors will be the first to feel the pain.
Well, not exactly. Patients will feel it first.
Most of those nurses could move to Colo. or Nev. and make another $30K to 40K per year.

Posted by: eLwood | November 10, 2009 03:14 PM

We have to open a NWA medical school to give those rich old folks a closer place to give money

It would be hard for UAMS to cut MD salaries as they don't pay them (with some exceptions)

It would serve all the hospitals right if every nurse in Arkansas took a sick day.

Posted by: mudturtle | November 10, 2009 04:41 PM

Gee, I dont think the Good Doctor actually told them he was cutting their paycheck, did he? He has been schooled well in double- and non-speak essay writing. I guess when they see their check is smaller than the last one, there will be another letter, from some poor front line manager, that says "Surprise, this is what Rahn was trying to tell you but was afraid to say it"

Posted by: Sanford | November 10, 2009 04:53 PM

>>We have to open a NWA medical school to give those rich old folks a closer place to give mone<<

And to produce more personnel for the second largest population in the state. My sweetie, RN, can now travel a few miles and earn her Advanced Practice degree rather than temporarily relocate to spend a year in L.R. So can the RNs in Ft Smith, Rogers, Eureka Springs, Harrison, etc.

Posted by: eLwood | November 10, 2009 05:35 PM

Umm, is Rahm taking a pay cut too?

Posted by: Doigotta | November 10, 2009 06:03 PM

And to think Dr. Rahn could only afford an $800,000 house in the Heights! Dang. I guess they're NOT paying him enough.

Posted by: OdaMae | November 10, 2009 06:09 PM

If only we had single payer.................

Posted by: EcoLez08 | November 10, 2009 06:34 PM

Gee, I guess much of what UAMS said about obtaining Ray Winder and how well off they are was BS.

Posted by: GPR | November 10, 2009 07:01 PM

If ANY area of the state is not suffering a medical manpower shortage, it is NWA.

If the idea is to correct an imbalance by building a new school, I'd look at Gillett.

But yeah, if you want to see the Chairman of a Department of UAMS it sure helps if they know you are 65 and have $10,000,000 WalMart or Hunt buck. You think those guys make the drive to East Little Rock just to "see how you are doing"

Posted by: mudturtle | November 10, 2009 08:35 PM

"not filling positions where work can be absorbed by existing staff".....in other words, we now expect one nurse to do the job of two nurses.

I hope other hospitals in the region do not follow UAMS's example and start rolling back merit increases. Nursing pay and benefits in Arkansas is already among the lowest in the nation.

Posted by: Scottie | November 10, 2009 09:18 PM

I'm pretty sure the physicians who received raises in the hundreds of thousands of dollar range
won't be affected and I"m pretty sure construction projects haven't been halted. I wonder how many raises to workers making under $50,000 we could give if those things were halted? Oh I'm sorry the chancellor does need his $400,000/year salary along w/ his paid country club membership, paid car, and housing allowance. I forget we still need very wealthy people to look down on low-middle wage workers. Please don't forget that just over $100,000 of the chancellor's salary comes from appropriations from the AR State Legislature and the rest is from UAMS revenue. Why is the chancellor not taking a cut? How come expansion projects haven't been cut? Please contact your state rep and ask them to not give anymore money to UAMS until they stop taking money out of the pockets of the hardest workers at UAMS (Nurses and Nurse's aides). As a nurse I can tell you that if my pay is affected on my next check I'm going to have to go back to night shift to pay my student loans or I may simply move on to an employer that values it nurses. I wonder if any other employees at UAMS find it coincidental that the employee satisfaction survey was before they decided to take away the pay raises they just handed out?

Posted by: John | November 10, 2009 10:24 PM

the letter listed is not the letter that floor staff received. the letter floor staff received is far different. please contact me for more info

Posted by: John | November 10, 2009 10:29 PM

Arkansas Blog

Pay cuts at UAMS

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