Vanderbilt University Medical Center is reducing its budget by $250 million amid uncertainty surrounding federal funding levels.
“In response to recent [federal] administrative orders impacting financial resources for medical research, it is necessary for VUMC to strategically reduce research operating costs,” a spokesperson for the institution said in a statement to Becker’s. “Hiring for most research positions will be paused and other cost-saving measures will be implemented.”
Jeff Balser, CEO and president of the Nashville, Tenn.-based VUMC, announced the cost reductions in a video to staff March 26, which was obtained by WPLN. While job cuts will not affect patient care, they are likely to affect support services such as human resources and IT, in addition to research positions, he said.
“We can’t fully determine the impact of the actions by the administration and Congress, and federal budget reconciliation may not be finished until the fall,” Mr. Balser said in the message to staff. “But we are building a budget for July 1 that achieves $250 million in cost reductions. This is a conservative approach, as VUMC revenue reductions of more than twice this amount are possible in the coming year.”
Across the U.S., healthcare leaders are navigating disruptions to federal funding. The University of California recently implemented a systemwide hiring freeze — affecting campuses including San Francisco-based UCSF Health and Sacramento-based UC Davis Health — to conserve funds. Leaders at UC cited both proposed executive orders in Washington and anticipated state cuts to the university’s 2025 to 2026 budget.
At the heart of the disruption are two major federal developments: The Trump administration’s plan to cap National Institutes of Health reimbursements for indirect costs related to medical research at 15% and looming cuts to Medicaid. While a federal judge has temporarily blocked the NIH proposal from taking effect, it has already sparked disruptions within academic medical settings. Meanwhile, Republican lawmakers are working to pass a budget resolution that calls for up to $800 billion in federal cuts over the next decade, with Medicaid expected to account for a significant portion.
“We cannot allow developments in Washington to impact our vital clinical programs. Millions of patients are depending on us,” Mr. Balser said in his message. “We are working closely with our national organizations to make it well understood that curtailing research has long-term negative consequences for the health of people in our region and across America.”
