After suffering a loss of $1.7 million during the first four months of the fiscal year, Dartmouth Hitchcock Medical Center has reduced the amount of money available for staff raises. The cut in funds will force the hospital to tighten its merit-based pay increase system. As a result, some staff members may not receive raises this year.
Previously, hospital managers had access to fairly substantial funding pools when determining the size of workers' pay increases. Almost everyone received raises, Jason Aldous, media relations coordinator at DHMC, said. Now only three percent of the previous year's total salary budget may be used for pay increases. Consequently, managers are encouraged to distribute this funding based on employees' performance evaluations.
The center has always followed a merit-pay system, but regular annual raises were predictable, Aldous said in an e-mail to The Dartmouth.
"Now managers are simply being asked to tie pay increases more directly to performance," he said.
Employees who are "solid or exceptional performers" will likely benefit from the change, Aldous added.
Even after the changes most employees will still see an increase in their salaries, Dave Evancich, vice president of public affairs, marketing and planning at DHMC, told the Valley News last week.
Aldous attributed the hospital's revenue loss to "a downturn in patient volume during the period," noting that many patients cancelled appointments due to bad weather.
"Reimbursement that is far less than the cost of services provided is a major problem for all hospitals in a good economy and only exacerbates the problem further in a bad economy," Aldous said.
The raise decreases are part of a larger plan implemented by DHMC's Board of Governors to reduce the hospital's spending.
Dartmouth Medical School also reduced its staff's pay increases this year as a result of decreased funding from the National Institute of Health, which covers more than half of DMS' budget, according to Adam Keller, the College's executive vice president for finance and administration. DMS cut raises from an average of four percent to two and a half percent this year.
"The medical school is looking across its entire budget, looking at the commitments they have, and they are trying to restructure those in a way that is financially sustainable," he said.
NIH funding is cyclical, according to Keller, and will likely increase since the public highly values scientific research.
The College has also faced strains on its budget. Endowments, one of the college's primary sources of revenue, have been smaller than usual due to the poor performance of the stock market, Keller said.
Regardless, the College will increase the amount it spends on salaries by four percent, as it has done in previous years, Keller said. While raises for Dartmouth staff are merit-based, all staff that meet "minimum expectations" will receive a pay increase of two and a half percent, Roland Adams, director of media relations, said.
"Throughout the College, we really want to protect the competitive natures of salary for faculty and staff," Keller said.
Union employees at the College have a "separate increase approach" that has not been discussed for the upcoming fiscal year, which begins in July, Adams said.
