Mercy Healthcare Sacramento, Catholic Healthcare West's seven-hospital system based in California's capital, has lost nearly $18 million on operations this year and has been losing money to the tune of $2.5 million a month since June, the system said.
Mercy Healthcare controls about one-third of the highly competitive Sacramento metropolitan market. The rest is split between Kaiser Permanente, Sutter Health and the University of California Davis Health System.
Mercy's flagship hospital is Mercy General Hospital, with 405 staffed beds, in Sacramento.
Some of Mercy Healthcare's operational losses have been balanced by investment and other nonoperational income. In the fiscal year ended June 30, Mercy Healthcare managed to scratch out a $1.9 million profit on $633 million in total revenues.
Still, Mercy executives said a significant turnaround is needed to get the division back on track.
"We have an operational issue here, and we're in the midst of turning things around," said Michael Erne, Mercy Healthcare's chief executive officer. Erne, who joined the system last December from Denver's Centura Health, a unit of Catholic Health Initiatives, wants to slash $8 million from the system's budget by year-end. Erne, however, declined to disclose his plans for achieving those savings, calling such disclosure "premature."
Expenses have jumped significantly this year because of labor settlements with the California Nurses Association, the high costs of dealing with the seismic upgrading of facilities and the year-2000 computer problem. The system expects to spend $70 million on earthquake-related upgrades by 2008 and up to $8 million on Y2K. New CNA contracts will add millions more in new expenses.