May 25—LAWRENCE — Lawrence General Hospital will cut approximately $6 million in staffing costs to address an expected $20 million budget deficit in 2021, President and CEO Deborah Wilson said Tuesday.
Fifty-seven staff members in non-clinical roles are impacted, according to hospital spokesman Benjamin French. Twenty of the 57 were laid off Tuesday.
The hospital employs a total of about 2,000 people.
According to an internal memo from Wilson sent Tuesday, the "difficult but necessary decision" was made for positions to be "eliminated or restructured" to offset the financial impacts of COVID-19 and chronic underfunding of Medicaid reimbursements.
"While all hospitals experienced a decline in revenue while elective care was paused in Massachusetts, Lawrence General met a much greater local need for inpatient COVID care," Wilson said in a public statement Tuesday afternoon.
The disproportionate COVID incidence rate in Lawrence required the hospital to significantly increase expenses to meet the community's need for inpatient hospital care, particularly intensive and critical care through the first and second surges, according to the statement.
Eighty-eight percent of Lawrence residents are people of color and half rely on Medicaid for their health coverage, according to the statement. Medicaid reimbursement levels, the hospital said, are typically much less than the actual cost of care.
The 2021 expected $20 million loss follows a downward fiscal trend for the hospital. According to French, Lawrence General Hospital lost nearly $5 million in fiscal year 2019.
In fiscal year 2020, the hospital was in the hole $13.1 million, despite significant CARES Act relief. The hospital has not received any state or federal COVID relief money since July 2020.
"We appreciate the state's willingness to advance payments, and we are hopeful for additional COVID relief funding this year, but this will not remedy our chronic underfunding situation," Wilson said. "To serve the greater Lawrence community, we need both pandemic relief and a long-term solution to our structural reimbursement deficit. Closing the gap in Medicaid shortfalls is the immediate and most critical priority."
The average hospital receives 18% of its gross revenue from the state's Medicaid program. Nearly 30% of Lawrence General's gross revenue, however, is for care delivered to Medicaid patients.
"This should not be happening here," Wilson said. "As the largest regional provider of acute care and the first line of health care for the city with the largest proportion of people of color in New England, Lawrence General should be garnering new resources and expanding services to close the health equity gap. Instead, we are forced to make cuts. The current payment system drives health inequity in Lawrence and the Merrimack Valley. Doing so is unfair and inequitable. This was true before the pandemic and even more so today."
Since the beginning of the pandemic, Lawrence General has been a major player in helping stop the spread of the disease across the Merrimack Valley. In addition to setting up an eight-lane drive-through testing site that has tested 234,000 people in partnership with the state Stop the Spread program, the hospital has also administered 103,000 doses of the COVID-19 vaccine at a clinic at the South Lawrence East School since January 2021.