Even a $1.5 billion budget and a reputation as one of the top medical centers in the world hasn’t been enough to shelter the University Health System entirely from the state’s economic woes. Citing budget challenges, the Health System announced this week a hiring freeze on any employees outside patient care positions.

Kara Gavin, spokeswoman for the health system, said employees working in human resources, communications, information technology and finance will likely be the first to feel the effects of the hiring freeze.

Jobs dealing directly with patient care, including doctors, nurses, pharmacists and physician assistants, won’t be subject to the freeze.

Gavin said the Health System would likely experience a reduction in staff size through attrition to deal with the budget issues.

Though the freeze is connected to larger economic problems facing the state, Gavin said rising health care costs tied to treating uninsured patients during recent years have added to the problems facing the Health System.

“The nature of people and the nature of insurance coverage is changing, and that affects our budget,” she said.

Gavin said the Health System’s increased costs have stemmed from patients whose health care isn’t covered under private insurance and footing bills from Medicaid patients who aren’t fully covered by government reimbursements.

The Health System has also seen a steady increase in the number of patient visits during recent years, Gavin said, exacerbating problems linked to rising insurance costs. Despite those rises in cost and the administrative hiring freeze, Gavin said, “overall, the Health System is in excellent financial health.”

Gavin said she couldn’t recall the last time the Health System had been in a hiring freeze. The last time employees experienced layoffs was in 1996, when 200 employees lost their jobs and another 386 were relocated to new positions in the Health System or elsewhere at the University.

Although the recent hiring freeze reflects a larger downturn in the state job market, Gavin said there is still a demand for students graduating with degrees in nursing, medicine, pharmacy and kinesiology at the Health System.

“For students who are hoping to work for U of M hospital when they graduate, we are still hiring for patient care positions,” Gavin said. “So we welcome students who are entering health careers to consider us for a place to work.”

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