GALVESTON — In one of the most staggering blows to both families and the county’s economy in recent memory, about 3,800 full-time jobs will be cut at the University of Texas Medical Branch as officials sharply downsize the island’s only hospital after Hurricane Ike caused severe flooding and deep financial losses.
Employees targeted for layoffs will receive pay until mid-January to help them through the holidays, said Dr. Kenneth Shine, University of Texas System interim chancellor. By the middle of next week, medical branch officials will begin unveiling a detailed plan and notifying employees about their job status.
Almost all the cuts will be at John Sealy Hospital, which, before the storm struck Sept. 13, boasted 550 beds and an elite trauma center able to handle injuries from large disasters, including petrochemical accidents.
The UT System Board of Regents’ unanimous decision Wednesday to cut thousands of jobs at the county’s largest employer, and greatly reduce clinical enterprises, ends weeks of painful limbo for the 8,000 people who work on the island campus. But it also creates new uncertainty and has severe repercussions for thousands of people who rely on John Sealy Hospital for medical care.
‘No Choice’
“This is tough; this has been on my heart and mind for some time,” said Dr. David Callender, medical branch president. Callender traveled to El Paso on Wednesday afternoon to meet with the governing board.
“The regents had no choice if the organization was to go forward and be able to make it financially,” Callender said.
But drastic downsizing of the hospital, which treats thousands of the state’s poorest and also serves the island and nearby counties, would have far-reaching implications. What the downsizing would mean for the thousands of uninsured or underinsured who received care there, or for locals who need surgical subspecialties was unclear Wednesday.
“Scaling back at UTMB Galveston, slashing services and changing the role it plays in providing health care to all Texans will have a devastating impact,” Judy Lugo, president of the Texas State Employees Union, told regents Wednesday.
200 Beds
In the next 60 to 90 days, the hospital would have enough employees to run a 200-bed hospital, with about 32 beds devoted to prisoner care, Shine said.
If in about four or five months, the need for beds in the general population exceeds 168, the medical branch would open the correctional care wing, making 100 beds available for prisoners. It could be months before the hospital’s Level 1 Trauma Center is revived, Callender said.
To support a hospital and a trauma center, the medical branch must have a blood bank, kitchen, sterilization equipment and pharmacy, all which were damaged by Hurricane Ike’s storm surge.
Before approving the job cuts, regents on Wednesday said the decision came down to saving the 117-year-old institution, which is losing $40 million a month since the storm struck Sept. 13, flooding 750,000 square feet of buildings and submerging equipment.
Addressing Losses
Most regents said Wednesday they were sympathetic and their decision was painful. But they were unbending as they considered the hurricane’s damage and the medical branch’s pre-storm financial woes. Despite efforts to cut costs, the medical branch faced a $35 million deficit before the hurricane.
“We simply cannot let this institution go bankrupt,” said Robert Rowling, board of regents vice chairman.
State lawmakers had grown increasingly reluctant to fund unsponsored care, which costs the medical branch about $120 million a year.
Some lawmakers were resentful that their constituents paid taxes to fund their own hospital districts, on top of paying for indigent care in Galveston and surrounding counties.
Last month, when UT System officials were considering laying off nearly 4,000 people after the storm, some high-ranking Texas officials and lawmakers intervened, saying such a move would be cruel to county residents, some who had lost their homes to the storm.
But they were only able to buy employees some time.
Payroll Costs
The medical branch employs about 12,500 people, about 8,000 of whom work on the island campus.
With major revenue generators offline, the medical branch has been burning through its cash reserves to meet a $70 million monthly payroll, officials have said. That figure does not include its contract to treat prisoners, which generates about $20 million in payroll.
About 3,000 medical branch employees, unable to return to perform duties because their workplace was damaged, have been receiving “Adverse Weather Leave” pay.
The medical branch had only $100 million in flood insurance, the most it could obtain, officials said. It had about $160 million in unrestricted reserves, which, at the rate the institution is losing money, could run out in three months, regents said.
UT System officials said Wednesday they lacked the resources to cover ongoing operating expenses and could not use money from Permanent University Funds, Available University Funds or money provided by the Federal Emergency Management Agency.
Still, regents could have found alternatives to layoffs and cutting services, Lugo said. After Tropical Storm Allison in 2001 caused destructive flooding at M.D. Anderson Cancer Center and the University of Texas Health Science Center in Houston, the UT System invested in infrastructure improvements to their buildings.
“We should be looking at ways of making UTMB Galveston better able to withstand strong storms and flooding,” Lugo said.
Helping The Displaced
The layoffs come during a national recession, but the health care industry is in better shape, Shine said. Medical branch officials would help mitigate job cuts and try to find jobs elsewhere for those laid off. Though difficult, Wednesday’s announcement should help employees plan their futures, Shine said. Some medical branch employees whose houses were damaged have called Shine asking if they should rebuild or use insurance money to move on, he said.
Regents, addressing a persistent island fear, said the state’s oldest medical school would remain in Galveston and not move to Austin. After the storm, the medical branch was forced to place hundreds of third- and fourth-year students at other hospitals.
Hundreds of first- and second-year medical students are living in Texas A&M University at Galveston dormitories on Pelican Island. Because of the storm, Texas A&M students are finishing the semester in College Station.
“We see no reductions and possibly some expansion in research activity and education activity,” Shine said.
If island and county residents wanted to have a louder say in shaping the hospital’s future, they would have to consider creating a hospital district with a taxing authority, Shine said.
“I think it’s essential they form a hospital district,” Shine said. “If they’d do that, they’d have much more input in the direction and overall size and services.”
