After a loss of $3 million in FY2013, RiverView reports $1 million YTD loss as of Feb. 28

    This week RiverView Health reduced its workforce through layoffs of eight employees from five different departments. Each employee was given a severance package. Additionally, eight employees received notice of a reduction in status.   

    “RiverView’s largest annual expense is its workforce,’’ RiverView President and CEO Carrie Michalski reported “Salaries and benefits account for 55 percent of our budget. Since the beginning of the fiscal year (October 1), we have been able to lower expenses by nearly 8 percent, and reduce our workforce by 53 full time employees through attrition and reduced overtime. Unfortunately, those reductions have not been enough to bring our labor expenses in line with where we need to be.’’   

    The layoffs will account for an estimated $344,000 in annual savings. According to Michalski, RiverView is on pace to have an 8.4 percent reduction in its expense structure by year end, that is equal to $4.5 million in expense reductions.   

    Michalski and the RiverView Board of Directors report year-to-date losses of $1 million as of Feb. 28. RiverView suffered a $3 million loss in fiscal year 2013.   

    “It is with heavy hearts that we reduce our workforce,’’ Michalski said. “But RiverView Health cannot sustain multiple years of million-dollar losses and remain in business serving our community.’’   

    There are many Minnesota hospitals that have fallen victim to hard times. According to the Minnesota Department of Health, Office of Rural Health and Primary Care, 34 hospitals have closed in Minnesota since 1987, 28 of them in greater Minnesota.   

    “We must move forward with organizational goals heavily weighted in finance, quality and service to our patients to survive this climate,’’ Michalski explained. “The closing of Crookston’s only hospital and the primary Critical Access Hospital for a number of surrounding communities, along with the loss of 400 jobs, would be devastating.’’   

    RiverView Health remains focused on its reason for being…the patient, Michalski said. No services have been reduced, and no direct patient caregivers were affected in Tuesday’s workforce reduction.   

    “The providers and support team at RiverView Health are highly skilled professionals dedicated to exceeding the expectations of every patient we serve,” she added.  “While RiverView employees refine the way we deliver high quality care to our patients, the community that RiverView calls home can also help assure its future.   

    “It’s simple. If the community values the hospital, our emergency care and convenient access to highly skilled physicians, patients should choose RiverView Health for their care needs, and encourage others to do the same.  Every dollar generated at RiverView Health is reinvested right here to sustain services and improve the health of our community,’’ Michalski continued. “If you have any concerns or questions about services, please call us or stop by to visit. We are here to serve you, and we want to be here for you and your family for many years to come.’’   

    Forty-two of the 148 hospitals in Minnesota are unaffiliated with a larger health network and remain independent. RiverView Health is proud to be one of the minority independent hospitals, Michalski said.   

    But independent or not, health care systems are struggling.   

    One of the most important issues facing U.S. health systems is the projected need for dramatic cost reduction in response to health reform. By many estimates, the reduction must reach 20-30 percent of total cost structure by 2015 to be able to confront a lean, health-reformed environment.   

    “We have a perfect storm of declining volume, patients seeking less care as deductibles and copayments continue to rise and at the same time our largest payers, including the federal government through Medicare, are balancing budgets through cuts in Medicare payments,’’ Michalski explained. “As a Critical Access Hospital, two years ago we were supported by a one percent profit margin on care to Medicare patients.  Today, we continue to be limited by federal sequestration to recovering just 99 cents on every dollar we spend caring for a Medicare patient.  That equates to a guaranteed loss of one percent for every patient who is Medicare eligible.  For RiverView Health that is over one third of our business.”   

    Hospitals and health systems of varying sizes across the nation have cut jobs from their workforces through layoffs, reduced employee hours, attrition, and elimination of vacant positions. In September of 2013, health care providers announced more layoffs than any other industry.