Mayo keeps eye on 2009 goals
By Jeff Kiger
Like most investment plans, Mayo Clinic’s investment portfolio took a $745 million shot to the gut to end the year down 18 percent.
"Our pension fund dropped from being fully funded during the early part of the fourth quarter to being about $1.2 billion underfunded by the end of the year," Mayo leaders wrote in a letter to employees. "Mayo remains committed to funding the pension plan, which will require a significant cash infusion over the next several years."
Analyst Jeff C. Bauer of ACS Healthcare Solutions in Chicago cited much larger pension losses at other institutions such as Harvard University, which saw its fund plummet by a third.
So 2008 was tough, what about this year?
"The overall economic picture for 2009 looks worse than 2008," according to the letter.
In the face of that, Mayo Clinic is setting the bar high for staff this year with a goal of a $142 million turnaround to reverse the 2008 numbers.
That would mean growing revenue by 7.2 percent and keep the increase of expenses at 5.2 percent.
"Those are aggressive goals, though not necessarily bad goals," Bauer said.
The plan is to improve the "value" of care at all three primary Mayo sites, increase donations and slash expenses, the letter to employees said.
Proposed reductions include:
• About $150 million cut from capital expenditures
• Filling only "essential" jobs
• Cutting or eliminating overtime
• Reducing supply and contract service expenses
• Reducing travel expenses
Looking at the early numbers and proposed plan for 2009, Bauer said Mayo just has to be flexible to respond to "surprises."
"I guarantee you that anyone who thinks they know what is going to happen is crazy at best," he said.
But it is important to note, he said, that Mayo seems to be taking reasonable steps to deal with the uncertain environment and it has a stronger foundation than most.