Dartmouth-Hitchcock CEO James Weinstein speaks about his book "Unraveled: Prescriptions to Repair a Broken Healthcare System" during an interview at his office at Dartmouth-Hitchcock Medical Center in Lebanon, N.H., on May 18, 2016. (Valley News- Sarah Priestap) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Related stories

Lebanon — Dartmouth-Hitchcock will lay off at least 270 employees, and as many as 460, before the end of 2016 and will review its clinical programs with an eye toward saving money, officials with the Lebanon-based health system said Friday.

Details of the layoff plans will be spelled out by mid-October, but D-H’s workforce is expected to be reduced by 3 percent to 5 percent, according to an email sent out Friday afternoon by Chief Executive Officer James Weinstein.

D-H’s system-wide workforce was 9,239 in June, according to spokesman Rick Adams.

The review of some of D-H’s hundreds of clinical programs would entail some “extremely difficult decisions,” Weinstein wrote. “We cannot be all things to all people.”

“Services will be evaluated, not just through the lens of whether they are financially beneficial, but also in terms of how they contribute to our patient care, research, and education missions,” he added.

“Service line leaders and managers across the organization” would be involved in the process of identifying where reductions would occur, Weinstein wrote. The Dartmouth-Hitchcock system includes Mary Hitchcock Memorial Hospital in Lebanon, clinics in Lebanon, Manchester, Nashua, Keene and Bennington, Vt. and four affiliated hospitals: Mt. Ascutney Hospital and Health Center in Windsor, New London Hospital, Cheshire Medical Center in Keene and Alice Peck Day Memorial Hospital, also in Lebanon.

Adams declined to speculate on whether any programs would be shut down, restructured or otherwise altered. “All options are on the table,” he said.

A merit raise program for the current fiscal year would not be delayed, Weinstein wrote. The program, which previously carried an $11 million price tag, now has an estimated cost of $15 million, according to Adams.

D-H’s current quest for cost cuts began after the health system discovered a deficit that was tallied at $12 million at the end of the fiscal year that ended June 30.

Disclosure of the deficit was preceded by the announcement in July that D-H’s chief financial officer was leaving to go back to school and would be replaced by the chief operating officer. Word of the deficit led to a downgrade in D-H’s credit rating by one agency and the shift to a negative outlook by another. And with Friday’s announcement of layoffs, the direct impact of the shortfall was on course to directly affect hundreds of employees.

“Reductions at all levels of the organization will be considered,” Weinstein wrote.

Late Friday afternoon, New Hampshire Gov. Maggie Hassan issued a release characterizing the layoff announcement as “disappointing and troubling news” and promising to deploy the state’s rapid response team to help connect the workers who will be laid off to what she said are the roughly 4,000 health care job vacancies in the state. That team is a unit of the state’s Office of Workforce Opportunity that meets with dislocated workers to inform them about “unemployment insurance, job retraining, health and human service programs and vocational rehabilitation assistance and counseling.”

D-H’s planned cuts weren’t crafted overnight. Weinstein’s email said D-H officials from across the organization had been working for several weeks on a “performance improvement program that focuses on optimizing revenues and cutting expenses.”

“We now know that to achieve financial stability, we need to identify $100 million in improvements, and we need to do this rapidly,” he wrote.

The deficit surfaced in the wake of a year-over-year $115 million jump in expenses that resulted from the changeover to new billing system and the outsourcing deal that transferred D-H’s revenue management operations to Conifer Health Solutions, a unit of Dallas-based Tenet Healthcare Corp., according to Weinstein.

Other drivers of what Weinstein termed “unsustainable increases in expenses” were expenditures on supplies, drugs and so-called “travelers” who are brought to the Upper Valley to fill vacancies in the nursing staff, he said.

Problems with the new billing and revenue management systems also led to a $40 million overestimate of revenue. That was equal to about 1 percent of gross revenue or about 3 percent of net patient revenue, which measures receipts after discounts included in contracts with insurers.

Weinstein’s email included links to four articles from the past 10 months in Becker’s Hospital Review, a trade publication, reporting on other hospital systems that posted declines in operating income.

“Other great organizations are experiencing similar downturns with the implementation of new systems and rising expenses,” Weinstein wrote.

Rick Jurgens can be reached at rjurgens@vnews.com or 603-727-3229.

Clarification

Pending layoffs announced by Dartmouth-Hitchcock on Friday that will affect at least 270 employees, and as many as 460, will not include workers at the affiliated organizations of New London Hospital, Mt. Ascutney Hospital and Health Center, Alice Peck Day Memorial Hospital, Cheshire Medical Center, and Visiting Nurse and Hospice for Vermont and New Hampshire, a D-H spokesman said Saturday.