In a continuing effort to offset financial losses, the Georgetown University Medical Center announced that it will lay off at least 65 non-tenured faculty and staff.
President John J. DeGioia said last Thursday that non-tenured faculty had already been notified of their dismissal, but staff members had not been notified.
The cuts mark another step in the University’s decade-long struggle to close an operating deficit at the Medical Center which amounted to $20 million in 2003 alone. The problem has persisted in spite of numerous attempts to improve the financial situation, including the July 2000 sale of the Georgetown Hospital to MedStar Health.
In that sale, Georgetown University retained control of the research center and medical school.
DeGioia has publicly committed himself to closing the deficit at the hospital by 2007. At an Aug. 30 speech DeGioia emphasized that the University must continue to cut costs.
“Because we have not yet achieved all of the expense reductions we hoped for, we now project an FY ‘05 deficit in the range of $25 to $29 million,” he said. “From the Board’s perspective, this makes it look like the situation is getting worse, not better,”
In August, Standard & Poors Credit Rating agency lowered Georgetown University’s overall credit rating, making it more difficult for Georgetown to borrow money. S&P described a downturn of the University’s financial state as caused primarily by losses at the Medical Center.
“Beginning in 1993, the university’s overall financial operations turned negative,” S&P stated in a press release. “Relative to budget and debt, Georgetown’s liquidity is significantly below that of the average ‘A’-rated private institution. Much of the operating deficit can still be attributed to the medical center,”
Director Mary Peloquin-Dodd at the S&P said her agency is convinced that Georgetown was committed to reversing its poor financial situation.
“We are expecting that the University fully intends to do everything to balance its finance sheet, especially in terms of research staff,” she said.
Amy Demaria, Director of Communications at the Georgetown University Medical Center, said that although $7.9 million has been saved through layoffs and miscellaneous cost-cutting, that figure is still $5 million short of the $13 million goal of savings for this fiscal year, and $12 million short of the total $19.75 million goal hoped for by the end of FY ‘05.
Peloquin-Dodd noted that financial losses due to medical research are not unique among American universities.
“In general, medical centers are not very profitable,” she said. “Research doesn’t necessarily pay for itself.”
To date, the Medical Center has reported a cumulative loss of $333 million from fiscal years 1995 to 2004.
