NASHVILLE (AP) - Vanderbilt University Medical Center officials say federal automatic budget cuts and a state decision require tough economic measures be undertaken.

The Tennessean (http://tnne.ws/Z6IddpZ) reported the hospital must make up for a $20 million shortfall by June 30.

Vice Chancellor Dr. Jeff Balser said the federal cuts mean payments are no longer being made to hospitals like Vanderbilt which treat a disproportionate number of indigent patients.

To avoid laying off staff or cutting pay, Vanderbilt has frozen accrual of additional vacation days by the medical center's more than 14,000 employees from April through June. That alone will save almost $12 million. Scheduled vacation may still be taken.

For employees who receive a portion of their pay based on performance, those payments are suspended.

Balser said the cuts are required by financial circumstance and also said Vand erbilt can't implement a pay raise on July 1 as it saves money in the new fiscal year.

"These actions to secure our future are absolutely essential," Balser wrote in a letter posted to the Vanderbilt University Medical Center website. "Failing to act aggressively and swiftly to manage our operational costs could result in serious financial consequences that would ripple across all mission areas and impact our future for years to come."

Economic pressure on the hospital is coming from both the federal and state levels.

Congress last month cut funding to many federal programs by 11 percent from 2012 levels. The act affects Vanderbilt's Medicare, Medicaid and NIH programs, Balser said.

Last week, Gov. Bill Haslam announced the state will not accept additional funds through the Affordable Care Act to expand Medicaid. That also figured into the medical center's decision, Balser said.

"So for the time being, Vanderbilt and Tennessee's other safety net hospitals will be managing the growing costs of uninsured health care while receiving far less financial support than in the past," Balser said.

The austerity program is aimed at saving an additional $30 million over two years, for a total of $50 million saved.