OHSU hiring freeze over $30M sequestration impact

OHSU, One of Oregon’s Largest Employers, Initiates Hiring Freeze in the Face of Economic Challenges
OHSU Press Release,

Current economic challenges include sequestration impacts, health reform financial changes and PERS costs

Oregon Health & Science University, one of the state’s largest employers with more than 14,000 employees, has initiated a university-wide hiring freeze in the face of economic challenges and economic uncertainty. These economic issues include the impacts of federal budget cuts through sequestration, the financial impacts of health care reform and the increasing cost of Oregon’s Public Employee Retirement System (PERS).

 

FAQ on the hiring freeze

“In viewing the financial landscape ahead, our leadership has determined that cautionary belt-tightening through a hiring freeze now is a prudent and necessary action,” said OHSU President Joe Robertson, M.D., M.B.A.

The hiring freeze and other cost-saving measures being instituted by the university will not affect the quality of patient care. Exceptions to the hiring freeze will be made for essential health care providers and in some instances, for the replacement of staff exiting crucial university positions.

One current pressing financial challenge for the university is the likelihood of sequestration, automatic spending cuts that will take place on March 1 unless Congress takes action to avert the reductions. OHSU depends on public resources – primarily federal grants, Medicaid and Medicare payments, and to a lesser extent state funds – for about half of its $2 Billion budget. The overall impact of sequestration on OHSU is estimated to be between $31 million and $33 million this year. That estimate includes federal cuts in Medicare funding, National Institutes of Health research funding, Department of Defense research funding and National Science Foundation funding.

“When compared to other public institutions in the state, OHSU will take one of the biggest financial hits through sequestration cuts,” Robertson said. “For example, more than 60 percent of National Institutes of Health research funding that is sent to Oregon from the nation’s capital comes to OHSU.”

A second financial challenge facing OHSU relates to ongoing health care reforms at the state and national levels. Health reform is a necessity for Oregon and the rest of the country. Furthermore, increased insurance coverage will result in better health for Oregonians. While necessary, reforms will also reduce payments for all health systems including OHSU. As a public corporation where earnings fund OHSU’s many statewide missions, OHSU must proactively and responsibly plan for these changes

Another economic issue for the university is the increasing cost of PERS. OHSU’s PERS costs increased by $20 million in July 2011. PERS costs will increase another $20 million in July 2013.

“OHSU is proud to have helped fuel Oregon’s economy throughout the economic downturn with the addition of 1,600 positions in the past four years. However, given the many known and unknown financial challenges that lie ahead, a hiring freeze is a necessary and responsible step that OHSU must enact at this time,“ added Dr. Robertson. “With prudent management, I believe OHSU will be well positioned eventually to again provide additional high-quality jobs for the region.”