PORTLAND — Maine Medical Center on Tuesday afternoon announced a slate of personnel and payroll cuts, including the elimination of 175 positions, layoffs of 50 employees and 12.5 percent reductions in compensation for top hospital administrators.

“This is a difficult day that is unfortunate, but necessary for creating the future that our patients and employees want and deserve,” said Maine Medical Center President and CEO Richard Petersen in a statement. “We firmly believe that by making tough choices today, we are positioning ourselves for sustainability. As we’ve said all along, layoffs were our last resort, but they were unfortunately necessary in setting up the organization for future success.”

According to a hospital announcement, the institution faced a late fiscal year 2013 budget gap triggered by reductions in payments from the government and commercial payers, as well as an increase in care for patients who cannot afford to pay, among other factors.

That financial shortfall reached approximately $15 million for the fiscal year that runs from Oct. 1, 2012, to Sept. 30 of this year, according to an internal hospital memo provided by the institution to the Bangor Daily News in June.

In addition to the layoffs, compensation cuts for administrators and elimination of vacant positions, the hospital announced Tuesday that more than 120 employees took advantage of an early retirement package that was offered last month. Those 120 came from a group of 374 who were eligible for the package, the institution announcement stated.

“We took a balanced approach to this (budget balancing) work, considering all non-clinical and clinical programs to determine where we had opportunities to do things in a better way for patients and employees,” Petersen said in a statement. “The success of our voluntary early retirement program is a fine example of how we can work to meet the needs of patients, employees and the organization.

“That was something that employees asked for and we did it because it was the right thing to do,” he continued. “The number of participants showed that the program was appropriately generous and it allowed us substantial flexibility with addressing our staffing needs moving forward.”

In May, Maine Medical Center announced a hiring and travel freeze in an attempt to control the emerging budget crisis.

News of personnel reductions at the hospital comes as the institution is promoting $40 million renovation plans, which include the addition of five new operating rooms.

MMC isn’t the only hospital in Maine pursuing expansion plans despite lower patient volumes and $484 million owed to hospitals in overdue Medicaid bills dating to 2009. Eastern Maine Medical Center in Bangor recently revived plans to construct a seven-story tower at its State Street campus as part of a $250 million project, while MaineGeneral Health is building a new $322 million hospital in Augusta.

MaineHealth, the parent organization for Maine Medical Center, in April approved a membership agreement with the North Conway, N.H.-based Memorial Hospital after nearly 18 months of talks between the organizations. The deal represented the first addition of an out-of-state facility to the MaineHealth system.

Since 1996, MaineHealth has brought eight hospitals, two home health agencies and a hospital support organization into its system. Most recently, it acquired Goodall Hospital in Sanford last fall.

Maine Medical Center, with 606 beds, is Maine’s largest hospital.

BDN Health Editor Jackie Farwell contributed to this report.

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