Immediate (April 3, 2006)

Maria McClellan
Fletcher Allen Public Relations
(802) 847-2886

FLETCHER ALLEN STREAMLINES MANAGEMENT:

Announces Elimination of 44 Positions, 31 in Management, To Help Organization Improve Financial Situation

BURLINGTON, VT -- Fletcher Allen Health Care announced today that it is eliminating 44 positions, including 31 managerial positions, as part of an overall effort to improve the organization's finances.

The organization was budgeted to make $4.4 million through the first five months of the current fiscal year, which runs from October 1, 2005 through September 30, 2006; instead it lost $2.3 million.  Fletcher Allen projects that these staffing changes will save the organization approximately $2 million during the remainder of fiscal year 2006.

A total of 26 employees are being notified that their positions are being eliminated, including 13 employees in managerial positions.  In addition, 18 vacant management positions are being eliminated. This brings the total number of positions eliminated to 44, including 31 in management and four support positions for management.  Additionally, four employees in managerial positions have been told that their positions are being changed from management to staff positions.

These staffing changes are part of a larger effort that is underway to improve the organization's financial picture by year-end and achieve a net operating income for the current fiscal year of approximately $8-$10 million.  Originally, the organization was budgeted to achieve a net operating income of approximately $15 million in FY06.

"We have experienced a difficult start to the fiscal year," said Melinda L. Estes, MD, president and chief executive officer.  "Our patient activity has been lower than expected, and in some cases, our expenses have been higher than expected.  As a result, beginning last December, we launched a number of initiatives to ensure we finish the year in a strong financial position." 

"It is encouraging that our financial outlook has already begun to improve as a result of our efforts," Estes said.  "In February, we were back in the black for the first time during this fiscal year.  Recent progress notwithstanding, we still have a long way to go before year-end, and in today's health care environment, it is clear that our efforts to find ways to be more efficient will be ongoing.  Quite simply, we will always be evaluating how we do things in order to continue to serve the health care needs of the people who live in our region." 

The organization looked for places where it could trim positions without affecting patient care.  "Our main objective was to further streamline our management ranks in order to make the organization more efficient and effective," Estes said.  "We continue to recruit for a number of direct patient care positions including respiratory therapists, pharmacists, nurses, operating room technologists and physical therapists."

"This is a difficult day for the employees whose jobs have been eliminated, and I want to acknowledge the impact that these layoffs will have on the individuals involved and their families," Estes said.  "It is also a difficult day for the entire organization, but I am confident in our ability to work together to move forward."

Fletcher Allen is committed to supporting affected employees.  The staff affected will be offered severance packages and continuation of health and dental coverage.  Affected employees also will receive outplacement services and access to an employee assistance program.  In addition, Fletcher Allen is working with the Vermont Department of Employment and Training.                       

Non-Personnel Expense Reductions and Revenue Enhancements Yield Results

The operational changes Fletcher Allen began implementing last December to help improve its financial situation include: 

• More effective use of inpatient rehabilitation beds at Fanny Allen
• More effective management of patient transfers and admissions into inpatient facilities, including critical care, acute care and rehabilitation beds
• Reduction of expenses for medical and non-medical supplies through the renegotiation and consolidation of vendor contracts
• Reduction of consulting expenses
• Elimination of activities and business operations that are not central to the organization's patient care mission such as eliminating the organization's printing and mailing operation

These initiatives are intended to improve the organization's financial position by approximately $5-$7 million during the current fiscal year. 

Background on Fletcher Allen's Financial Situation

Fletcher Allen is a not-for-profit 501(c)(3) organization. All revenues in excess of expenses are reinvested in the organization's patient care mission.  In fiscal year 2005 which ended on September 30, 2005, Fletcher Allen recorded net operating income of $19.9 million and provided more than $16 million in charity care to those who could not afford it. In fiscal year 2004, which ended on September 30, 2004, Fletcher Allen recorded net income from operations of $3.8 million and provided more than $16 million in charity care.

About Fletcher Allen Health Care

Fletcher Allen Health Care, in alliance with the University Vermont College of Medicine, is Vermont's academic health center and is one of 125 in the country. Fletcher Allen also serves as the community hospital for Chittenden and Grand Isle Counties. Founded in 1995 through the merger of Fanny Allen Hospital, Medical Center Hospital of Vermont and the University Health Center, Fletcher Allen serves one million people in Vermont and northern New York through more than 40 patient care sites and 100 outreach clinics. The organization has more than 6,000 employees, including more than 475 physicians and a nursing staff of more than 1,200 registered nurses.