CUTTING COSTS IN MONTANA: DEACONESS-BILLINGS SYSTEM LAYS OFF 127, REDUCES MANAGERS' PAY BY 10%
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March 10, 1997 12:00 AM

CUTTING COSTS IN MONTANA: DEACONESS-BILLINGS SYSTEM LAYS OFF 127, REDUCES MANAGERS' PAY BY 10%

Ron Shinkman
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    Faced with shorter inpatient stays and an increase in outpatient procedures, Billings, Mont.-based Deaconess-Billings Clinic Health System laid off 127 employees on Feb. 13 and cut work hours for 42 others.

    "Managed care is becoming a reality in Montana," said Deaconess-Billings spokeswoman Leslie Blair.

    Blair noted the across-the-board cuts will save the system-which includes 238-bed Deaconess Medical Center, two medical practices, four regional clinics and Aspen Meadows Nursing Home-about $6 million a year. The system, one of the largest in Montana with about $230 million in annual revenues and more than 2,000 employees, has embarked on a program to cut $15 million a year in costs.

    Earnings figures for the not-for-profit system were not immediately available, but Blair said Deaconess-Billings is aiming for a 4% annual net margin.

    Along with the job cuts, the pay of top managers has been reduced 10%, work-staff assignments will be changed to create more efficiencies, and purchasing practices will become more uniform to ensure supplies do not sit unused.

    The healthcare consulting division of Arthur Andersen & Co. is assisting with the changes, Blair said. Members of the national accounting and consulting firm's staff have been on-site since November.

    Deaconess-Billings was forced to make changes as the daily inpatient census at the hospital dropped to about 130 in recent weeks from 150 a year ago. Length of stays also dropped 13%, to 5.12 days from 5.88 days. Meanwhile, outpatient visits are steadily increasing.

    "It's a re-engineering to address all the shifts," Blair said. She added that the introduction of HMO products into the region by Deaconess-Billings and competitor Saint Vincent Hospital and Health Center is driving the changes.

    Montana, with small metropolitan areas and a scattered population, has one of the lowest managed-care penetrations in the country, at about 5%, according to industry experts. But that figure has been creeping up in recent years.

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