GE Healthcare announced Friday it is laying off 400 people at its Waukesha location.

WAUKESHA - GE announced large-scale layoffs in its health care unit Friday, with most coming from its Waukesha-based diagnostic imaging segment. Company spokesman Brian McKaig declined to give an exact number of affected employees, saying only that it was "less than 400."

The news is a blow to the work force of Waukesha County, where GE is one of the largest employers. Prior to the staff reduction, GE Healthcare had about 3,000 employees at its Waukesha campus, where its diagnostic imaging business is headquartered, McKaig said. The company has roughly 7,000 employees throughout the state.

The health care unit has struggled financially of late, posting a 17 percent slide in earnings during the first quarter of 2008, after 3 percent drop in profit during fiscal 2007.

"This is shaping up to be a tough financial year for GE Healthcare," McKaig said.

The company has put much of the blame for those results on the federal Deficit Reduction Act of 2005, which went into effect in January 2007.

The legislation reduced Medicare payments for imaging equipment used at freestanding imaging centers and physician offices, thus curtailing their ability to pay for new X-ray, magnetic resonance and other imaging equipment.

In addition, insurance companies and state legislatures are taking a number of actions aimed at reducing the amount spent on imaging, McKaig said.

Dan Kurt can be reached at dkurt@conleynet.com.