On August 13, Maine Medical Center announced its plans to layoff 50 employees, terminate 175 vacant positions and cut top hospital administrators salaries by 12.5 percent.

These cuts are the latest in a series of actions Maine Medical Center has taken to deal with a tough fiscal year. In July, administrators reported a $15 million budget shortfall, which they attributed to reduced payments from government and commercial insurers, increased demand for free care and reduced patient volumes.

In May, Maine Medical Center announced a hiring and travel freeze and last month it offered a voluntary early retirement package to about 400 employees. In yesterday’s press release, Maine Medical Center said about 120 employees took advantage of the early retirement offer.

“This is a difficult day that is unfortunate, but necessary for creating the future that our patients and employees want and deserve,” Maine Medical Center President and CEO Richard Petersen said in a press release. “We firmly believe that by making tough choices today, we are positioning ourselves for sustainability.”

Despite the cutbacks in payroll and personnel, Maine Medical Center’s Board of Trustees approved a $40 million expansion project in July, which includes five new operating rooms, a cardiac hybrid operating room, and improved sterilization procedures and facilities. The expansion has been approved by the Portland City Council and still awaits approval by the Maine Department of Health and Human Services.

Lincoln County Healthcare CEO Jim Donovan said the Maine Medical Center cuts have no direct effect on Lincoln County Healthcare but added, “The financial strength of Maine Medical Center is of critical importance to all of us in the MaineHealth system.

“I understand and support their efforts to take steps to retain that strength as they plan for 2014.  The pressures they are responding to are common to all of us.  Declining volume, deteriorating payer mix and reimbursement is central to the St. Andrews story.  We are all dealing with a very complex set of issues that require difficult decisions be made.”

The LCH Board of Trustees is expected to approve the Lincoln County Healthcare 2014 budget in mid-September.

Sue Mello can be reached at 207-844-4629 or suemello@boothbayregister.com.