Despite tough economic times and a fiscal year that ended in a break-even result, Mayo Clinic officials today said that layoffs are not on currently on the agenda.
Jeff Bolton, Mayo’s chief financial officer, describes layoffs as a “last resort.”
The other core value for us – the needs of the patient comes first number one – but the needs of… the well-being of our employees is also central. It is our physicians, our scientists, our allied health staff, our nurses that really make a difference,” said Chief Administrative Officer Shirley Weis at a news conference this morning. “We are very committed to job security. We’ll do everything we possibly can to preserve jobs. Of course, we can’t guarantee anything.”
However, the clinic has “essentially” frozen saleries for physicians and senior leadship for 2009, Weis said.
The year was tough, with costs that “significantly outpaced increases in revenue,” according to a Mayo statement. Costs grew by 7.6 percent while revenue increased by only 4.5 percent.
Mayo noted, however, that it fared “better than industry benchmarks.”
Health care economic expert Jeffrey C. Bauer, of ACS Healthcare Solutions in Chicago, said this week that break-even is a good result for the current economy and Mayo probably remains in the top 25 health-care institutions in the country in terms of financial health.
While the patient volume remained relatively flat for 2008, income from patient care plummeted by $88 million from 2007’s $293 million income to $205 million.
A major part of that loss due to not fully funded care for Medicare patients, said Bolton. That accounted for $605.1 million in lossesin 2008. And that number is growing as percentage of Medicare patients is growing.
Will Mayo change its policy on Medicare patients?
“No. At this point we are accepting all patients,” answered Weis. “The needs of thepatients come first.”
But the 2008 results put “significant pressure on funding for our research and education missions,” Bolton, said in a clinic statement.
The value of Mayo’s investment portfolio dropped 18 percent, or about $700 million. The clinic investment portfolio lost exactly as much during the last quarter of 2008 as it gained for the entire two-year period of 2006 through 2007, $693 million.
The Mayo pension fund remains $1.2 billion underfunded. Administrators say they expect to continue making “multi-million dollar payments in addition to its annual $210 million pension fund contribution.”
Mayo has asked employees to help by working at the departmental level to cut costs and increase revenue.
“We have been preparing for financial challenges caused by rising costs, reduced reimbursement and demographic shifts resulting in more Medicare patients,” Weis said in the clinic statement. “The recent economic downturn has dramatically accelerated our need to act. Our efforts to reduce expenses and increase revenue are intended not only to help us weather the current storm but to provide a platform for transformation.”