Wisconsin hospital system laying off over 300 employees, cites cost and revenue pressures


A serious well being care system in central Wisconsin is shedding greater than 300 staff and leaving 500 vacant jobs unfilled amid financial headwinds which might be difficult the business.

Citing elevated labor prices, excessive provide bills and reductions in reimbursements, Marshfield Clinic Well being System final week introduced plans to put off 346 staff, nearly 3 p.c of its workers.

Of the 346 staff, 222 are based mostly in Wisconsin, in response to a letter the well being system despatched to the state Division of Workforce Growth on March 1. 

Marshfield Clinic mentioned the anticipated layoff date is about for Might 19. The affected Marshfield Clinic staff might be a mixture of administrative positions and medical workers. It’s unclear which open positions are being left unfilled.

In a press release, Marshfield Clinic CEO Susan Turney mentioned the system is “not resistant to the immense stress and unprecedented challenges” going through the well being care business.

“Lowering workers is all the time painful. That is in the end about preserving the long-term effectivity and sustainability of our group,” Turney mentioned. “We’re dedicated to supporting all affected staff with sources and providers to assist them of their transition, together with help trying to find different roles throughout the Well being System.”

Marshfield Clinic declined to remark additional on the layoffs, which come after the well being system consolidated Sexual Assault Nurse Examiner applications in Marshfield and Weston, and amid merger talks with Minnesota-based Essentia Well being. In September 2022, the well being care supplier was reportedly on tempo to see tens of millions in monetary losses for the yr, in response to WSAW-TV.

Hospitals confronted with price and income pressures

Eric Borgerding, president of the Wisconsin Hospital Affiliation, mentioned he’s by no means seen the mix of expense and income pressures going through hospitals proper now.

He mentioned labor prices have exploded for the reason that begin of the pandemic, as have pharmaceutical and tools prices.

“The prices are rising quickly on the one facet, whereas the power of hospitals to recoup these prices has been considerably diminished,” he mentioned.

On the income facet, the reimbursement hospitals obtain from Medicare and Medicaid solely account for about 67 cents out of each greenback a hospital spends caring for a affected person, Borgerding mentioned.

He mentioned Medicaid and Medicare make up the vast majority of income many hospitals obtain, and the state’s growing old inhabitants is anticipated to trigger that quantity to proceed rising.

“Sixty 5 p.c or so of hospital income is coming from two insurance coverage applications that pay hospitals far lower than what it prices them to offer care,” Borgerding mentioned. 

Ashley Swanson, an affiliate professor of economics on the College of Wisconsin-Madison who research well being economics, mentioned it is onerous to make generalities concerning the well being care business as a result of monetary conditions fluctuate from hospital to hospital.

“Some hospitals make very wholesome margins, some hospitals make detrimental margins, some hospitals have substantial money available, some hospitals have basically no money available,” she mentioned. “It is actually onerous to talk usually phrases a few sector that varies fairly so dramatically.”

Whereas some hospitals get the vast majority of their income from treating Medicare and Medicaid sufferers, Swanson mentioned many have substantial margins due to the revenues they negotiate from sufferers which have business medical insurance.

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“It tends to be the case that the reimbursements from business insurers are fairly a bit increased than the reimbursements from Medicare and Medicaid,” she mentioned. “So, it is a little bit bit difficult to speak about what precisely Medicare and Medicaid and business margins are, as a result of hospitals have substantial fastened prices.”

Swanson mentioned fastened prices are the identical from affected person to affected person and embrace issues like facility, labor and tools prices. Variable prices differ from affected person to affected person and embrace issues like remedy and disposable provides.

“The variable margin for Medicare sufferers is on common constructive, however when you attribute fastened prices to Medicare sufferers, then the form of complete margin related to Medicare sufferers turns into detrimental,” she mentioned. 

That is why the bigger margins from business care sufferers are essential to cowl fastened prices, she mentioned.

The extent to which hospitals will be capable to meet the financial challenges will fluctuate from group to group, Swanson mentioned.

“It is going to be felt rather more considerably by a few of these hospitals which might be in a extra precarious monetary place than different hospitals that, within the pre-pandemic interval, had rather more vital reserves,” she mentioned.

How will sufferers be impacted?

Steven Deller, professor of agricultural and utilized economics at UW-Madison, mentioned the affect on sufferers largely depends upon the positions being eradicated.

“A number of instances hospitals — after they’re taking a look at chopping prices — they take a look at complete issues like maternity wards and say, ‘We’re simply not going to do this anymore,'” he mentioned. “However what they are going to do is they are going to attempt to shield the medical workers.”

If the vast majority of a hospital’s layoffs are workplace positions, Deller mentioned, the affect on sufferers is often lower than it could be if the layoffs have been focused at medical workers.

Borgerding mentioned hospitals do every thing they’ll to protect and maintain entry to high quality care, however any layoff goes to have an effect on a well being system’s operations. 

“They will make the minimize on the administrative stage to the extent potential, or they’re going to make different kinds of cuts,” Borgerding mentioned. “It simply form of depends upon what is going on on — reductions or consolidations. The place it does have an effect on service at the very least to this point, is extra the provision of sure forms of providers in sure areas.”

Swanson added that there’s restricted analysis particularly on the results of layoffs on affected person care, however, in idea, any form of contraction might result in affected person hurt.

“That is definitely one thing that policymakers and regulators are anxious about and one thing that we should always think about when hospitals or well being programs are contemplating layoffs,” she mentioned.

In comparison with different high-income nations, america spends extra on its well being care system, however typically has much less capability than its friends, Swanson mentioned.

“Now we have fewer medical doctors per capita than different nations, for instance,” she mentioned. “How can we reduce with out inflicting some affected person hurt? That is the actually difficult job of researchers and policymakers, attempting to determine how we will lower spending in order that we will put money into different components of the financial system, different forms of public well being, environmental high quality, training and all of the issues we care about.”