Responding to financial pressures that threaten teaching hospitals across the country, UC Davis Health System officials have announced plans to eliminate about 100 positions by Jan. 1. Of that number, at least 71 are vacant positions and about 30 are career employees who will be laid off, effective Jan.1. In addition, between Jan. 1 and June 30, health-system administrators will be planning more budget cuts for both the current fiscal year and fiscal year 2000-2001. These cuts will involve significant workforce reductions. Officials are likely to achieve many of these reductions through attrition -- such as through the elimination of vacant positions, as they become available -- but significant numbers of layoffs will be necessary. "Thanks to the hard work of managers and staff, we have been able to minimize the number of employees who now face layoff," said Martha Marsh, director and chief operating officer of the health system. The health system is making the reductions because of serious financial challenges that it and virtually all other teaching hospitals across the United States are facing. Here are some of the major reasons: o The federal Balanced Budget Act of 1997 has cut Medicare spending by more than $70 billion. UC Davis will experience an annual cut in excess of $7 million. o An increase in managed care enrollment and a decrease in compensation to doctors and hospitals is reducing revenues for providers across the nation. The Sacramento region is one of the most heavily penetrated areas in the country for managed care. o Pharmaceuticals and other costs are rising dramatically. Last year, the health system's pharmaceutical costs increased 25.7 percent over the previous year. o UC Davis Medical Center continues to be the area's leading "safety net" hospital for the growing number of people without insurance. Reimbursements for Medi-Cal and county services fall far below the cost of providing the services. Last year, the health system provided $125.2 million in charity and uncompensated care. o The health system must comply with new, tougher seismic safety standards for California hospitals. The price tag for making the necessary improvements to acute-care hospitals throughout the state is conservatively estimated at $11 billion. Indeed, some hospitals may close because they simply cannot marshal the resources needed to comply with the law. Research and teaching costs have long been supported by the clinical activities at U.S. academic health systems. Decreases in clinical income threaten research and teaching programs. Although the layoffs are necessary for the long-range future of the health system, it is always painful and difficult to lose employees, Marsh said. "We are deeply concerned about the effect these decisions will have on individual employees who face layoff," Marsh said. "We know that few circumstances in life are as stressful and worrisome as the loss of a job." To help laid-off employees find new jobs as quickly as possible, the health system is taking a number of steps: o The Sacramento Human Resources Department is working with campus officials to ensure preferential rehire rights for laid-off employees in vacant positions elsewhere within UC Davis. o Health system officials are contacting Sacramento County and other large employers in the region to assist in placing laid-off employees in their job vacancies. o Officials have set aside $150,000 to pay for retraining intended to help staff return to employment within the health system or at campus. Laid-off employees may obtain more information and apply for funds by calling Training and Development at (916) 734-2676. o The health system's Human Resources department will provide individualized job placement aid, career counseling, benefits planning and help with résumé writing and interviewing skills. o Laid-off employees are eligible for reduced fees for University Extension and regular UC Davis courses. o Human Resources will provide office space, computers, photocopiers, fax machines and telephones for job-search activities. o Laid-off employees will have preferential re-hire rights and may, if appropriate, work in the temporary support services pool while they seek full-time employment.