(Host) Officials at Bennington's Southwestern Vermont Medical Center are projecting a $22 million budget deficit by the end of its fiscal year in September.

In a memo released Thursday, the hospital's interim CEO said the shortfall was due to "seriously flawed" 2009 budget projections.

VPR's Susan Keese has more.

(Keese) The scope of the problem was revealed in an audit released this week. The audit was ordered after the announcement of a $1.3 million dollar deficit last March. The hospital's former chief executive stepped down after the original shortfall was revealed.

Dr. Mark Novotny, the acting CEO, said the hospital board, senior management and current and former executives share responsibility for the problem.

He also noted that the people responsible for the 2009 budget were no longer at the medical center.

Novotny cited "outdated fiscal management," "ill-informed decisions and a lack of adequate oversight" as the factors leading to the situation.

(Novotny) "We know that the budget management system we've used at SVMC over the years is outdated and inadequate for managing a contemporary hospital, and we need to make other changes in hospital operations in improving how our clinical processes are documented and billed for. So we understand some opportunities for improvement."

(Keese) According to documents furnished by the hospital, the biggest shortfalls were in declining pension funds and contractual losses - that's the gap between anticipated and actual revenues from Medicaid and Medicare.

Dr. Novotny:

(Novotny)The main problem is because there were errors in the budget and mistakes in projecting our revenues -- we built expenses in the organization to match what we thought we would be receiving from insurance companies for patient care.

(Keese) The hospital has already reduced expenses by laying off and cutting hours for about 90 hospital employees. The hospital has also cut some programs.

Novotny couldn't say yet whether more cuts were in store.

For VPR News, I'm Susan Keese.