MeritCare Health System, a Fargo, N.D.-based organization that owns or manages four hospitals, announced that it may reduce its workforce by up to 300 positions even though its patient volume continues to increase by 8% to 9% each year. MeritCare has about 7,000 employees and said that at least 75 to 100 will lose their jobs, others will have their work hours reduced, and some open positions will go unfilled. Exact details are expected to be given at a news conference scheduled for Thursday afternoon.
The workforce reductions are being tied to an announcement by Blue Cross and Blue Shield of North Dakota that it will withhold 2.5% of its reimbursement to MeritCare between Aug. 1 and Dec. 31 of this year. An anticipated 10.6% cut in Medicare physician reimbursement is also being cited as a reason for the layoffs.
Denise Kolpack, vice president of the North Dakota Blues plan, confirmed that it will withhold up to 2.5% of its reimbursements in an attempt to deal with an unexpected cost increase in claims. Kolpack said the organization had budgeted $15 million in underwriting losses for 2008 but, if current claim trends continue, projections indicate that it will have to pay out between $22 million and $25 million. In addition to withholding reimbursement, the company is leaving open positions unfilled, and cutting its travel and advertising budgets. (For more on job cuts in the healthcare industry, please see the Modern Healthcare cover story that appeared June 2, 2008, A little off the top.) -- by Andis Robeznieks