The prestigious Henry Ford Health System said last week that it lost $43.8 million in 1998, and the not-for-profit system blamed managed care for a large part of its financial woes.
The downturn included a $24.4 million loss on operations, which exceeded an operational loss of $14 million predicted earlier.
By comparison, Henry Ford, which owns or is affiliated with 13 hospitals, turned a $38 million profit in 1997. It's anchored by 634-bed Henry Ford Hospital in Detroit. Revenues grew last year to $2 billion from $1.9 billion in 1997.
In reaction to the losses, Henry Ford said it will reduce its work force by 425 employees, or 2% of its 19,000 workers, by the end of April. Most of the reduction will be accomplished through layoffs, the system said.
"The vast majority of the displacements will be in nonpatient-care jobs, unless an entire program is closed," the system said.
The system incurred charges last year of $19.4 million for one-time expenses, which included making information systems year-2000 compliant, starting a hospital joint venture and divesting a 45,000-enrollee HMO in northern Ohio (Oct. 19, 1998, p. 2).
For its losses, the system blamed low Medicare and Medicaid payments, pharmaceutical and technology costs, debt owed by managed-care plans, and market forces that have made it difficult to raise rates for its HMO, 505,000-enrollee Health Alliance Plan.
Henry Ford, often cited as a model of health system integration, also operates a 760-physician medical group. The system's long-time president and chief executive officer, Gail Warden, recently received the American College of Healthcare Executive's Gold Medal award, which recognizes leaders who have made significant contributions to the healthcare field (March 8, p. 54).
Henry Ford blamed a January snowstorm for its incurring cancellations and other costs that totaled several million dollars.