ELLSWORTH — Maine Coast Memorial Hospital told its employees this week that it will have to cut its annual budget by about $3 million, which will result in some layoffs.

A look at the first quarter of this fiscal year showed an operating loss of $635,000, hospital CEO Charlie Therrien said.

He attributed the loss to lower reimbursement rates from Medicare and MaineCare and a decrease in the number of patients at the 64-bed hospital that serves Hancock and western Washington counties.

Efforts to keep the cost of care low for the commercial insurance marketplace also contributed to the loss, Therrien said.

“All of these factors have come up kind of at the same time,” he said.

Some but not all of the budget reductions will come from cuts to the hospital’s 650-person staff.

Therrien said he does not know where the cuts will come from but he would be working over the next couple of weeks to figure out how to balance the budget.

“We feel that we needed to make these changes, but our focus is still on providing excellent patient care,” he said.