GALVESTON -- The University of Texas Medical Branch in Galveston was already in financial distress before Hurricane Ike's devastation, and laying off 3,800 people is designed to keep the state's oldest medical school from going bankrupt, officials said.
The UT Board of Regents unanimously approved the cuts Wednesday during a meeting in El Paso, saying they wanted to keep the medical school in Galveston but could not allow it to continue losing as much as $40 million a month, as it had since Ike hit the island in September.
"The [financial] model at UTMB was not working before the hurricane," regents Vice Chairman Robert B. Rowling said in a story in Wednesday's online edition of the Houston Chronicle. "There were going to have to be some drastic changes."
UTMB is the largest employer and a driving economic force in the area, said Tom Johnson, executive director of the Texas Faculty Association, the union representing faculty there.
"This announcement was a disastrous error," Johnson said Thursday.
Ike caused nearly $710 million in losses to UTMB, which has 12,500 employees -- 8,000 on the island campus. Officials have said that only about $100 million of the damage from the Sept. 13 hurricane is covered by insurance.
Some of UTMB's 85 buildings were inundated by up to 8 feet of water. The hospital's kitchen, blood bank and radiology department were virtually destroyed.
UTMB's future had been in question long before that.
It receives money from patient care and contracts for providing care to people without health insurance and to prisoners, along with funding from the UT System. But it has lost money on the indigent-care program -- as much as $59 million in fiscal 2008 -- and the hurricane only exacerbated the problem.
Dr. Kenneth Shine, interim chancellor of the UT System, expected most of the job cuts to come from John Sealy Hospital, the island's only hospital. Shine was optimistic that most of those laid off would find work at other health care institutions.
Regents asked Shine to give priority to hiring laid-off UTMB employees at other UT institutions and to provide placement services to help them find jobs. A retirement incentive package may be offered as well.
According to The Galveston County Daily News' online edition Thursday, employees targeted for layoffs will receive pay until mid-January to help them through the holidays. By the middle of next week, medical branch officials will begin unveiling a detailed plan and notifying employees about their job status.
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