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Lahey Health to lay off 130 workers at three hospitals

Lahey Hospital & Medical CenterJoanne Rathe/Globe Staff/Boston Globe

Lahey Health, the Burlington-based hospital network, is laying off 130 people at three hospitals and cutting the pay of top executives as it moves to close a budget gap.

Lahey said Wednesday that it lost $21 million during the six months that ended March 31 because it spent more than anticipated on the rollout of a new software system and lost business during the harsh winter as patients canceled appointments. It also blamed what it called low reimbursements from public and private insurers that did not cover the full cost of delivering care to patients.

Lahey’s budget problems are a significant change from last year, when it earned $53 million on operations. They come just months after Lahey acquired Winchester Hospital, expanding its network to four hospitals.


The health system said all of its hospitals are growing, with revenues up 5 percent from last year, but the growth has not been as brisk as expected. It recently hired FTI Consulting of Washington, D.C., to help manage its budget issues.

Eight Lahey executives, including its chief executive, Dr. Howard Grant, have agreed to 10 percent pay cuts for the rest of the year.

“Although decisions like this are extremely difficult,” Grant said in a statement, “they ensure Lahey Health’s long-term ability to meet the evolving needs of the communities we serve in an exceedingly challenging health care environment.”

The job cuts represent about 1 percent of Lahey’s workforce of about 14,000 and include managers, clinicians, and administrative staff.

They include 95 people at Lahey’s flagship hospital in Burlington, 30 at Winchester Hospital, and five at Beverly Hospital.

Lahey Health also includes Addison Gilbert Hospital in Gloucester.

The cutbacks come two months after Grant sent a note to employees warning of the budget problems.

“Like other health care organizations, we feel extraordinary pressures of a dynamic health care marketplace,” he wrote. “We are experiencing minimal increases in reimbursement, while at the same time costs for labor, real estate, medical supplies, and services are all on the rise.”


By cutting costs, Lahey expects to break even this fiscal year, which ends Sept. 30.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.