Major Reorganization at Marquette General Hospital

Over the coming weeks, Marquette General Hospital will tighten the financial belt to include departmental cost savings plans, a wage freeze, and a 10 day per year management furlough plan. Additionally, the re-structuring will eliminate 21 staff positions, mostly in management areas. Further staff reduction through attrition is expected to assist with tighter control of filling vacated positions.

Hospital officials say several factors are responsible for the restructuring of MGH services, including the nationwide economic recession, patients seeking care in Wisconsin, increasing outpatient usage trend, and national health reform reimbursement decline.

“We are licensed for 315 inpatient beds,” explained MGH Chief Financial Officer Jerry Worden. “Outpatient medicine, most notably in the surgical areas, has made tremendous advances in recent years and Marquette General’s organizational structure must conform to that reality. Our inpatient census has dropped considerably, making it necessary for us to reconfigure from a 315-bed inpatient facility.”

Worden also explained that although outpatient procedures at MGH are increasing at a steady pace, outpatient revenue increases are not completely back-filling the revenue losses due to inpatient market decline. That revenue gap requires MGH to save about $4.5 million in expenses this fiscal year, which runs through June 30, 2012.

“We started this process during the past fiscal year by offering a voluntary early-retirement plan that roughly 50 employees accepted,” said Worden. “In addition, we made a major change from a defined benefit pension plan to an employee investment participation (401K) program. Nonetheless, we find we must restructure and adapt to the realities of a changing medical care delivery environment, and that process will involve some painful decisions.”

“These are our initial restructuring steps,” Worden said. “We expect to save about $4.5 million. We may increase the intensity of the savings initiative based on how the remainder of our fiscal year plays out in terms of patient volume and revenue.”

Worden said the community can play a role in the outcome of MGH fiscal year restructuring. He pointed out that shrinking volume and favorable payment reimbursement to Wisconsin providers has made those providers extremely aggressive in targeting Upper Peninsula patients. Combating the outpatient campaign being waged by out-of-state providers is especially important in what is already a soft market due to the economic recession.

MGH President and CEO A. Gary Muller said, “We must restructure to best meet the needs of our patients in a new world that emphasizes outpatient medicine. We are doing so while maintaining the highest standards of inpatient treatment. However, what the people of the U.P. have to come to recognize is that when they travel out of state for health care, they are not just taking MGH market share with them, but also their neighbor’s job. In addition, out-migration drives up health care insurance premiums for both employers and their employees.”

According to Muller, “Along with several other U.P. hospitals, we are working on the Superior Health Partners model of health care delivery, which boils down to quality, access and cost. We have also initiated a sweeping customer service campaign, which we believe will reinforce to U.P. residents that Marquette General is their regional medical center.”

Marquette General plans to provide the community with periodic updates as to the progress and effectiveness of its fiscal restructuring plan, Muller said.