WakeMed announced Friday that it will eliminate 85 positions in anticipation of a $35 million budget shortfall in the coming year. The hospital system is the county's largest private employer, with 7,576 clinical and non-clinical personnel.

In a statement released to employees, WakeMed indicated layoff notifications will come by Sept. 3.

"About one third of these individuals will, if they choose, have the opportunity to shift to another assignment within the WakeMed system, including the new patient tower," said CEO Bill Atkinson in a written statement. "More than a third of the reductions are in VPs, directors and managers. No staff nurse is being displaced."

Like other major employers in the Triangle, WakeMed saw revenue beginning to fall as early as 2007 and began strategies to avoid layoffs, including cutbacks in overtime and new hires. In 2008, the hospital system continued cost-cutting and elected to suspend its WakeShare program, which awarded employees year-end bonuses based on excess net income.

Don Dalton, spokesperson for the North Carolina Hospital Association, said this is the first staff reduction he has heard of at a major hospital in the state. Smaller hospitals, he said, have borne the brunt of the flagging economy. An NCHA survey last spring showed one in five North Carolina hospitals had already had workforce reductions.

In July, Johnston Health announced the elimination of 31 part- and full-time positions and a reduction in hours for 13 more employees, citing the "weakest economic climate in the past 75 years."

"We've seen some rebound in operating margins and total margins among hospitals, but it has not yet rebounded to the level that it was just a year ago and is still significantly below the level that it was two years ago," said Dalton. "Some of the rebound that we are seeing is due to cost containment measures in hospitals."

Looming cuts in Medicare reimbursement to physicians will add to the financial burden at hospitals, said Dalton. As many as one-third of physicians in the state are employed by hospitals.

"Unless Congress fixes it, physicians will take a 21 percent cut in their reimbursement from Medicare starting next year," he said. "Independent physicians will probably be less eager to add new Medicare patients to their ranks, sending more seniors to hospitals for care. Hospitals do not recover their costs for treating Medicare patients, so that would result in more financial losses at a time when many hospitals' bottom lines are already shaky to nonexistent."