ROCKLAND – Northeast Health, the parent corporation that runs Penobscot Bay Medical Center in Rockport and several other health care organizations in Knox County, announced Friday it would be cutting some positions.

Last month, NEH identified a $1.3 million operating loss for the fiscal year that ends March 30. The organization took steps to address the loss, such as implementing a hiring freeze, limiting overtime, premium pay and the use of outside agency workers, and freezing all but emergency capital expenditures.

NEH continued work on a plan to address the loss, which it announced to staff on Thursday.

Seven employees will lose their jobs, Maggie Laughlin, NEH director of community relations and planning, said Friday. The employees represent the equivalent of 5.46 full-time jobs, she said.

Another 13 employees, including part-time and full-time staff, will have their hours reduced. These cuts amount to 3.5 full-time equivalent jobs, Laughlin said.

Three open positions will not be filled, and seven employees voluntarily chose to take retirement or transfer to another open position at NEH, or to resign.

In all, NEH employs 1,200 workers, making it one of the largest employers in Knox County. Its annual operating budget is $70 million, which includes an annual payroll of $35 million.

In addition to the hospital in Rockport, NEH operates Kno-Wal-Lin Home Care and Hospice based in Rockland; Camden Health Care Center, soon to be replaced by the Anderson Inn at Quarry Hill in Camden; Quarry Hill retirement facility in Camden, and the Knox Center for Long Term Care in Rockland

Laughlin said the cost reduction plan doesn’t include any cuts to nursing staff.

“It was mostly support-type positions” that were cut, she said. Community relations, patient registration, housekeeping and administration were some of the departments affected by the cuts.

Executive staff took voluntary pay and benefit cuts of 5 percent to 7 percent of compensation, Laughlin said. Management staff took a 4 percent cut in compensation.

In addition, all staff will face a reduction in the accrual of “paid time off” days.

Laughlin said NEH officials hope the cuts are temporary and believe they will address the looming budget shortfall. “We have been very, very careful about the way we’ve done this” so further cuts won’t have to be made, she said.

The operating loss was attributed to several factors, including having to pay higher wages to recruit staff in a tight labor market; a steep increase in the cost of liability insurance; increased drug costs; and a cut in the reimbursement of Medicare costs.