Economy brings unwelcome surprise for health care

Mayo Clinic takes measures to make

it through

By Jeff Hansel

The faltering U.S. economy produced a surprise for health care providers. It triggered problems they didn’t expect to happen until baby boomers begin retiring in 2011.


"We’re seeing some of this come home to roost earlier," said Mayo Clinic spokeswoman Shelly Plutowski.

Mayo announced to employees last week that it has taken aggressive action to counter fiscal strains that trickled down from the national economy.

Health providers have for many years dealt with financial hurdles that existed long before banks and lenders started to fail. Primary among the hurdles is Medicare reimbursement rates that health care providers say are too low. The federal government sets and pays reimbursement rates for elderly citizens covered by Medicare.

"There’s a growing number of Medicare patients, and with that, as Medicare patients become a larger percentage of the patients that we care for, there’s declining reimbursement," Plutowski said. "And so our costs for caring for the Medicare patients are not covered by what Medicare pays us."

She said she’s not aware of any changes in the way Mayo will accept Medicare patients.

But Mayo Clinic in Arizona told patients in August that it will "only continue to see patients with the traditional Medicare plan." That means, except when there’s already a contract already in place, Medicare Advantage Plans won’t be accepted.

"If you are enrolled in a Medicare Advantage Plan in which we do not participate as a contracted provider, then we regret to inform you that we can no longer see you as a patient at Mayo Clinic in Arizona after January 1, 2009," patients were told.

Mayo doesn’t meet


financial targets

Mayo officials say they will keep patients as their top priority as they deal with the dynamic economy and the murky waters of Medicare.

"We’re taking short-term actions to keep the organization financially strong over the long term," Plutowski said. That includes delaying equipment replacement, and some capital projects, such as renovations.

"Historically in the last few years we have performed within our financial targets," Plutowski said. This year, Mayo Clinic Rochester CEO Dr. Glenn Forbes told employees, the clinic has not met plan.

"The challenges facing health care today are great, and they’re not likely to subside, even when our nation’s economy rebounds," Mayo national CEO Dr. Denis Cortese, chief administrator Shirley Weis and chief financial officer Jeffrey Bolton wrote to employees. "We will continue to see financial pressure from declining reimbursement and increasing numbers of Medicare patients."

Mayo work force

Will employment change at Mayo in Rochester?

"We have to be prudent in all areas of resource management, and that includes hiring," Plutowski said. But she said staff layoffs "would be at the bottom of our list" of potential solutions. Staff members lost through turnover and retirement might not be replaced.


Plutowski said patient needs will be the priority in making decisions.

"Our first organizational commitment is to our patients, secondly to our staff," she said.

Mayo’s goal will be to increase the value of care delivered to patients.

"We will accomplish this by relentlessly pursuing quality, driving out waste, improving our efficiency and effectiveness by integrating across the enterprise and developing new and innovative models of care, and evolving to meet the needs of tomorrow’s patients through individualized medicine," the administrators wrote.

Changing health care

National health care reform must address the way health care is paid for and the way it’s delivered, Plutowski said.

Health providers are paid based on volume. The more procedures they perform, the more money they make, Plutowski said. That system doesn’t reward organizations that provide cost-effective care, she said.

If everyone had insurance, would that fix the problem?


"We agree with the idea that everybody should have insurance. But our health care system can’t support that right now," Plutowski said. "We need health delivery system changes as well."

Plutowski said Mayo expects it will be several years before the nation’s financial system recovers and decisions are being made with that in mind.

Cortese, Weis and Bolton asked employees to "rise to meet the challenge ahead."

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