Boston physicians cut their own salaries to help hospital

Medical department chiefs donated a portion of their paychecks to Beth Israel Deaconess Medical Center and ask other physicians to follow.

By Karen Caffarini — Posted April 6, 2009

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Physicians at Beth Israel Deaconess Medical Center in Boston are taking out their checkbooks to save jobs at the financially strapped hospital.

The chiefs of the 12 medical departments, along with Stuart A. Rosenberg, MD, president and CEO of the Harvard Medical Faculty Physicians group at BIDMC, each took a voluntary pay cut of about $27,000 for the year, for a total of $350,000. That money will save about 10 jobs, hospital CEO Paul Levy wrote in his blog, "Running a Hospital."

The department heads also sent letters soliciting contributions from about 1,100 doctors who are on staff, or affiliated with the hospital. The doctors have been asked to write a check or take a payroll deduction. No dollar amount was suggested.

"We wanted to help. It was never a question of should we or shouldn't we, but a question of how to do it and how best to do it," said Mark Gebhardt, MD, chair of the Dept. of Orthopaedic Surgery.

Dr. Gebhardt believes many of the physicians will donate something. "Everyone's financial obligations are different. But I've had colleagues ask me how and to where they can write a check."

Levy said he and his wife are matching $1 for every $10 donated until April 10. In addition, the CEO, along with the hospital's vice presidents and chief operating officer, have all taken voluntary salary cuts.

Many hospitals across the nation are making steep cutbacks, including layoffs and physician salary cuts, due to the flagging economy. But observers believe this may be the first time physicians have voluntarily cut their salaries to help their employer.

Their action is drawing praise from hospital employees and fellow physicians.

"This is a real testament to the concept of a health care delivery team and the value the physicians place on their hospital co-workers. It is heartwarming to see this kind of effort by our physician community to benefit patient care," said Bruce Auerbach, MD, president of Massachusetts Medical Society.

Dr. Gebhardt said colleagues have expressed admiration and gratitude for the sacrifices.

A stop-gap measure

BIDMC is facing a $20 million loss in fiscal year 2009 as a result of reductions in state funding, a slowdown in research spending and lower patient volume, Levy wrote in his blog. Other hospitals have cited investment losses, larger numbers of patients who are unable to pay, and reductions in reimbursements.

Originally, Levy anticipated about 600 of the 6,200 full-time equivalent employees would be laid off, but that number was whittled to 150 after a number of cost-cutting options were implemented, based on staff input. The physicians' donations cut the number of layoffs to about 140. Levy said he hopes that number will drop again as more contributions are collected.

Levy said these actions would close the budget gap in 2009, but added there is still uncertainty for 2010. He did not rule out more layoffs then.

Hard times for hospitals

Fitch Ratings is predicting more dismal times ahead for nonprofit hospitals, saying credit ratings will drop more often than they will rise from July 2010 through January 2011. Fitch expects hospital reserves to be more stable this year, but said they are still recovering from 2008, when cash reserves plummeted due to investment losses.

The ratings firm pointed out that unemployment is still rising, adding to the numbers of uninsured patients. Capital continues to be hard to obtain. Also, more Medicaid reimbursement cuts are expected, as states struggle with their own budgets.

Dr. Gebhardt said the hospital has gone through difficult times in the past, and the staff rallied together and pulled through.

"This is a special place. People really do work well together as a team," he said.

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