In fiscal year 1997, the Georgetown Medical Center recorded an operating loss of $50 million, creating a $28 million deficit for the University. But by year’s end, the administration’s outlook belied a sense of optimism for the future.

On Wednesday, Jan. 28, 1998, THE HOYA reported on the administration’s plans to reduce the Medical Center’s losses with a series of cost-cutting measures, aiming to save $300 million by the summer of 1999. A high-level committee composed of University President Leo O’Donovan, Chief Operating Officer ichael Kelly and other executive vice presidents had regularly convened, hoping to create fiscal solutions without cutting student services and shrinking faculty numbers.

“Although the Medical Center’s financial status has been improving in recent months, university officials have had to deal with the 1997 deficit,” THE HOYA wrote. “Several proposals came from the meetings, among them the possibility of cutting the 1998 budgets of each of the main campuses.”

Faculty members who spoke to THE HOYA on condition of anonymity said they had heard rumors of forced budget cuts for each department. “We were concerned,” said one source. “There [are] so many things we don’t know.”

The immediate solution was to cut $5.7 million from Central Administration’s budget, bypassing constraints upon the main campus or the Medical Center. Future fiscal years planned for budget cuts across every department, but without the possibility of layoffs. Combined with other cost-cutting measures and an increase in hospital patient capacity, the university hoped to ultimately achieve their goal of $300 million in savings.

The optimism may have been misplaced. Leaner economic times and the post-Sept. 11, 2001 economic slump would delay the recovery of the Medical Center. According to the most recent university projections, there will be no recovery until 2007 at the earliest.

In 2004, the Medical Center incurred $83 million in losses, and was forced to lay off 65 employees as part of a cost-restructuring plan conceived by Daniel D. Sedmak, then-executive vice president for the Medical Center.

HOYA Staff Writer Fred Lestina condensed this HOYA story that was originally published on Jan. 28, 1998. HOYA History runs every Tuesday.