Case study: ND system must cut $15M in costs

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It's a sign of the times. Struggling with the boogeymen faced by most of its peers, including inadequate reimbursement and rising uncompensated care levels, Fargo, N.D.-based MeritCare Health System is cutting a substantial $15 to $30 million from its budget. It's not that the system is in trouble--it had excess income of about $19.5 million last year, and admissions were up as well--but clearly, execs aren't happy with the trends they see.

The not-for-profit system, which had approximately $800 million in annual net revenue, performed $24 million of health service last year for which it no longer expects to be paid, and also delivered about $2.5 million in charity care. Also, execs are worried about Medicare reimbursement, which is set about 80 percent of the national average.

To address these issues, MeritCare may leave about 300 positions vacant as employees leave, consolidate some of the system's 18 clinics and delay clinic renovations, said Bruce Pitts, the system's executive vice president for clinical services. But the system won't postpone salary raises, as that could hurt retention, Pitts said.

To learn more about MeritCare's plans:
- read this ModernHealthcare article (reg. req.)
- read MeritCare's annual report (.pdf)