PORTLAND, Ore. (AP) Oregon's only medical school and teaching hospital Oregon Health Science University is imposing an immediate freeze in hiring and salaries, and expects to lay off some personnel to cope with a funding gap of more than $30 million primarily from declining investments. Hospital President Dr. Joe Robertson said it is clear that the global financial crisis will continue for years rather than months, and OHSU is facing investment losses as well as declining revenues from reductions in elective surgery and increased demand for free care. The unprecedented investment losses account for about 95 percent of the shortfall, estimated at between $30 million and $35 million, said spokesman Tim Kringen. Last month Robertson warned of the financial difficulties, despite a recent $100 million gift from Nike co founder Phil Knight and large cash reserves. "OHSU managers responded very well to earlier calls for cost cutting and cash conservation," Roberts said in a statement. "Additional steps must be taken. We will leave positions open, defer expenditures and make other sacrifices with the goal of preserving vital services for Oregonians." The state research university has 12,400 employees, operates schools of medicine, nursing, dentistry, pharmacology, science and engineering, OHSU Hospital and Doernbecher Children's Hospital. State revenues account for only 3 percent of its budget. Robertson said each department will be developing a cost cutting target within the next two weeks, including layoffs. The scope of layoffs was not immediately clear. Besides declines in investment income, OHSU had been counting on a 6 percent increase in patient revenue, which it has enjoyed for some time, but has seen just a 1.2 percent increase this year, Kringen said. When times get tough, people tend to put off elective surgery, and lose their health insurance, he added. The university said all salaries of unclassified administrative staff and faculty will be frozen until further notice, there will be no bonuses or new hires without top executive approval, and executives have chosen to give up incentive pay this year. Union personnel will continue to be paid according to their contracts. There is a hold on capital expenditures, delays in expansion of various departments, and no new spending for conferences, travel and minor equipment. The university is expecting demands for free care to increase as the recession continues. OHSU released this statement Monday: PORTLAND, Ore. The university is faced with the task of making reductions as a result of losses in investment income and lower than anticipated hospital revenues linked to the economic downturn. The measures will include freezes on hiring, salaries and bonuses. The university will also defer nonessential capital expenditures and impose new restrictions on staff travel and overtime. "OHSU managers responded very well to earlier calls for cost cutting and cash conservation," said Dr. Robertson. "As volatility continues in global markets, it is now clear that we are facing a financial challenge that will be measured in years rather than months. Therefore, additional steps must be taken. We will leave positions open, defer expenditures and make other sacrifices with the goal of preserving vital services for Oregonians." Here are some additional details on OHSU's cost cutting measures. Effective immediately, salaries of all unclassified administration staff and faculty will be frozen at current rates until further notice. Classified employees will continue to be covered by their collective bargaining agreements. All new hires will require approval from the top executive level. No one time payments (example: bonuses) will be made to employees without executive approval. As part of this step, OHSU's executive leaders have chosen to forego any incentive pay in the current financial year that they would typically receive as part of the university's Executive Leadership Plan. OHSU Healthcare has placed a "pause" on hiring (prioritizing those positions that directly impact high quality care), placed a hold on some capital expenses, modified timelines for unit expansion, and stopped funding for conferences, travel and minor equipment. Unit led reductions will also be necessary. These will involve some staff and/or program reductions. Each of these reductions will be considered carefully by OHSU's executive leaders in order to preserve programs and personnel in the long run. So far this fiscal year, the hospital has seen a 1.2 percent increase in patient volume, but it had planned for a 6 percent increase. During economic recessions, patient volumes traditionally decrease so a quick recovery of this revenue is considered unlikely. It is also noteworthy that according to the American Hospital Association, every 1 percent rise in the national unemployment rate translates into 2.5 uninsured patients. With the market changing so fast, Dr. Robertson said that any financial analysis of the funding gap OHSU faces would be a snapshot in time. However, for working purposes the gap is estimated at between $30 and $35 million. In addition, the trend is clear that the global downturn is a long term factor. Working closely with individual units, OHSU will establish a cost cutting target within the next two weeks, knowing that the target may change as conditions evolve. "Although this belt tightening is extremely difficult for us, it is less than what many other employers in Oregon have had to undertake," Dr. Robertson added. "While we are one of the largest organizations in the state, our sole focus remains our own residents' needs. All of our missions are dedicated to preserving and improving the health of Oregonians. 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