Chicago hospital, struggling to survive, cuts pay and jobs
South Shore Hospital, in a bid to stay open under a mountain of unpaid bills, is slashing salaries by 10%, laying off employees and seeking concessions from vendors.
"We're in a serious cash crunch," says CEO Tim Caveney, who cited the cutbacks.
The 136-bed hospital, a "safety-net" institution in Chicago's South Shore neighborhood, is losing $180,000 a month, mainly because a backlog of Medicaid reimbursements has nearly doubled to $6 million since mid-2014. "That's a lot," he says.
Caveney said the 105-year-old hospital isn't closing, but he acknowledged that "when you do something like this," staff can leave, "and that could be a problem." Net revenue (what it collects) is $39 million, he said.
The across-the-board pay cut exempts only minimum-wage workers—about 12% of more than 500 employees—and commences at the first of the year, Caveney said. Another five to 10 workers will be laid off, on top of the 50 who lost jobs this year, he added.
Caveney is looking for relief next year in the way the state allocates supplemental public aid payments, which are based on 1997 volume, he said. "We need to try to bridge that," he said of the wait for changes, which require General Assembly approval.
In the last two decades, South Shore's Medicaid-related billings have increased substantially, to 60% of revenue, leaving it at a disadvantage. "Our reimbursement from the state is very low compared with other safety-nets," Caveney said.
During the state's epic two-year budget stalemate, the amount owed to health insurers, or managed care organizations, contracted to cover the bulk of the state's Medicaid recipients swelled to $3 billion.
Refinancing state debt in September has reduced the figure to $1.15 billion, according to a spokesman for Illinois Comptroller Susana Mendoza, but Caveney said the impact remains elusive for South Shore. "MCOs are very good at taking their time and delaying their claims," he said.
Denials increased 2% this year, he said, costing the hospital $2 million.
Meanwhile, under a program beginning Jan. 1 called HealthChoice Illinois, the state aims to increase the share of 3.1 million Medicaid recipients who are covered from about 63% to at least 80%. Even so, it hopes to save $1 billion over four years by working with fewer insurers and reemphasizing preventive care.
"South Shore Hospital, struggling to survive, cuts pay and jobs" originally appeared in Crain's Chicago Business.
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