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COLORADO SPRINGS, COLO. -- Memorial Health System is in financial trouble, and officials admit layoffs are possible as a way to recover after losing more than $7 million so far in 2011.

Officials attribute the financial losses to declining patient volumes and a downturn in the stock market. The net income for the system was $14.5 million below budget as of July, and it lost an additional $9.4 million in August, putting it in danger of violating a bond covenant. In short, the system may not be able to generate enough revenue to pay its investors.

Officials said they hope to avoid layoffs through a series of cost-cutting measures, including early retirements, voluntary reduction in work hours and hiring for "mission-critical" positions only.

Officials also said the uncertainty of Memorial's future ownership has a lot to do with its decline in patient care. The hospital may soon be run by a not-for-profit, depending on what happens with the vote in November.

"Today we are a city enterprise, tomorrow we could be an independent non-profit, we may be a part of a large non-profit system, we could be a part of a for-profit," Memorial Spokesman Brian Newsome said.

Doctors are recommending Memorial less often to their patients, and officials said the national economy is forcing patients to put off non-emergency procedures.

Memorial was in a similar situation in 2008 when it lost $32 million, but it made $70 million the next year thanks to cost-cutting measures and new management.

“During this financially challenging time, we remain committed to our mission to provide highest quality health care,” Memorial CEO Dr. Larry McEvoy said in a statement. “Every dollar we earn is reinvested directly into patient care, which only strengthens our resolve to ensure we stay financially healthy.”