Executive Councilors and top state officials said they had no knowledge Dartmouth-Hitchcock planned to lay off hundreds of employees when they approved a $36.5 million contract with the provider this week to staff New Hampshire Hospital.

“I am floored,” said Executive Councilor Chris Sununu, a Newfields Republican who is running for governor. “I am wondering whether they were waiting to seal the deal with the contract before they announced this because it would have put that contract at risk.”

Citing significant budget shortfalls, Dartmouth-Hitchcock announced Friday it plans to lay off between 270 and 460 employees by the end of the year.

It’s not clear whether the cutbacks will reach the state-run psychiatric hospital in Concord, where Dartmouth-Hitchcock currently employs roughly two-dozen psychiatrists, advanced nurses and administrators to care for patients with severe mental illness.

The organization has yet to identify “specific areas” for the “reduction in force,” said Dartmouth-Hitchcock spokesman Rick Adams.

“At this point, our target is 3 to 5 percent of our workforce, but nothing more specific,” Adams said in an email.

The Executive Council voted unanimously Wednesday to award Dartmouth-Hitchcock a three-year contract providing psychiatrists at New Hampshire Hospital, after it delayed the decision over staffing concerns and a labor dispute that forced nearly a dozen medical workers out the door.

The state had no prior notice of the impending layoffs, according to Health and Human Services Commissioner Jeffrey Meyers, who learned about the cutbacks Friday.

“I am concerned,” Meyers said. “I have asked officials of Dartmouth-Hitchcock to reaffirm to me immediately, and to the public, that these layoffs will in no way impact any of the services provided to the state of New Hampshire under the recently approved contract.”

Gov. Maggie Hassan’s office similarly learned about the planned layoffs Friday, spokesman William Hinkle said. Hassan, a Democrat now running for U.S. Senate, called it “disappointing and troubling news.”

Joe Kenney said the five-member council should take up the contract at its next meeting on Sept. 21 if the layoffs affect any services.

“If things aren’t going to be fulfilled in the contract because of the layoffs, we need to know about that ASAP,” said Kenney, a Republican councilor from Union. Concord Councilor Colin Van Ostern, a Democrat who is running for governor, did not return a call for comment.

The council had delayed a decision on the contract in August, citing a need for more information about staffing and a patient who committed suicide hours after being released from the hospital’s care.

Dartmouth Hitchcock has staffed New Hampshire Hospital since July 1 under a temporary agreement that lasts through October. The three-year contract will kick-in then, but can be terminated by the state at any time with 30 days notice.

While the bulk of the contract expenditures cover care at the 168-bed New Hampshire Hospital, it also calls for Dartmouth-Hitchcock to provide staff at the state’s juvenile detention center in Manchester and the Glencliff Home. There’s an option to renew the agreement for two additional three-year terms.

Dartmouth-Hitchcock was the only bidder to take over the contract from Dartmouth College, which has staffed the state hospital since the 1980s. The transition prompted a labor dispute that led to the departure of nearly a dozen hospital psychiatrists and advanced-practice nurses in July.

The group, which tried unsuccessfully to unionize last spring, accused Dartmouth-Hitchcock of being unwilling to negotiate employment terms.

“This news only deepens my concern about the quality of service Dartmouth-Hitchcock will be able of provide at New Hampshire Hospital,” said Dr. Matt Davis, a psychiatrist who was pushed out in the labor dispute and now works at another hospital.

Dartmouth-Hitchcock pulled providers from its practice in Lebanon and closed nine of the 21 psychiatric beds there to fill the staffing holes at New Hampshire Hospital.

Adams did not say Friday whether Dartmouth-Hitchcock plans to reopen those beds.

The controversial contract is the latest obstacle for New Hampshire Hospital, which has faced a nursing shortage in recent months and had to delay the opening of a new 10-bed crisis unit for a year. The hospital often has a waitlist. Most patients are committed involuntarily after experiencing a psychiatric crisis.

Dartmouth-Hitchcock announced the layoffs Friday in a memo sent to staff. CEO Dr. Jim Weinstein said after closing out the last fiscal year with a $12 million deficit, officials are now trying to identify $100 million in improvements.

Weinstein attributed the loss to the hospital experiencing “unsustainable increases in expenses,” over $115 million more than the previous fiscal year. He said the increases came from the hospital’s “new business systems, revenue management services and the associated labor, and travelers, supplies and pharmaceutical cost, to name a few.”

The $12 million deficit was unexpected, Weinstein said, “rather than achieving the positive margin we had been expecting.”

“We are confident we have corrected the problems that led to the revenue overestimates and continue to work on maximizing the effectiveness of our systems,” he wrote. “Now we must take on the expense issues.”

As of June, there were more than 9,000 staff working in the Dartmouth-Hitchcock system. Personnel costs make up 64 percent of the hospital’s overall expenses, according to Weinstein.

Weinstein wrote that layoffs would be effective toward the end of the year. “We expect we will have more specificity by mid-October,” he said.

Hassan directed the state’s Rapid Response Team to assist the affected Dartmouth-Hitchcock workers.

“New Hampshire Employment Security and other state agencies will use every resource possible to connect those affected with a new employment opportunity, including the nearly 4,000 job openings in health care in New Hampshire,” she said in a statement.

(Ella Nilsen contributed to this report. Allie Morris can be reached at 369-3307 or amorris@cmonitor.com.)

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