Southcoast Health System lays off 95 employees

St. Luke's, top, and Charlton Memorial hospitals are owned by Southcoast Health Group.

NEW BEDFORD, R.I. (WPRI) – Southcoast Health System announced Wednesday it has laid off 95 employees, blaming the job cuts on “unanticipated financial challenges” during the first half of its fiscal year.

New Bedford-based Southcoast was created in 1996 through the merger of three community hospitals in Southeastern Massachusetts: Charlton Memorial in Fall River, St. Luke’s in New Bedford and Tobey in Wareham. The company declined to specify the exact locations of the job cuts.

Southcoast previously laid off 70 workers in October 2014 and 35 more in January 2015.

“Health care organizations operate in a turbulent environment,” Southcoast CEO Keith Hovan told staff in a memo Wednesday morning. “Every day brings challenges that must be managed prudently and with compassion. Those challenges have forced us to make some very difficult decisions.”

Southcoast posted a $5 million operating profit for the fiscal year that ended Sept. 30, compared with a loss of $30 million the previous fiscal year, but has been unable to sustain the positive momentum. The company posted an operating loss of $10 million in the final three months of 2015, according to a financial disclosure.

“These financial challenges are attributable to higher than budgeted operating expenses, largely a result of our Epic implementation,” Hovan wrote, referring to a new medical technology system being introduced at Southcoast.

“During the first two quarters of this fiscal year revenue has grown positively at a rate of 4% – a significant accomplishment, particularly given the lack of a flu season,” Hovan wrote. “However, expenses have grown at 6% during that time, which is an untenable variance that must be corrected.”

Southcoast is simultaneously in the process of trying to merge with Care New England, Rhode Island’s second-largest hospital group. The announcement of the layoffs at Southcoast comes a day after Care New England cut 58 employees.

Southcoast spokesman Peter Cohenno said the job cuts would have no impact on the proposed transaction with Care New England. “This is completely independent from that,” he told WPRI.com.

In an extended interview Tuesday, Care New England President and CEO Dennis Keefe said he hopes a definitive agreement for its merger with Southcoast will be approved by both board of directors before the end of April.

Also on Wednesday, a group describing itself as the “Coalition to Protect Local Healthcare” purchased a newspaper ad and publicized a new website that criticizes the proposed Care New England-Southcoast merger. No information was provided about who had paid for the advocacy material.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes The Saturday Morning Post. Follow him on Twitter: @tednesi

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