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Health-care provider also shutting clinic due to finances

FARGO - Ninety MeritCare employees lost their jobs Thursday and a rural clinic in LaMoure, N.D., will close at the end of the month as North Dakota's largest health-care system strives to improve its bottom line.

Ninety other MeritCare employees will work fewer hours and 120 vacant positions will be eliminated, said Dr. Roger Gilbertson, president and chief executive officer.

"It's a sad day but an important one for MeritCare," he said.

Fargo-based MeritCare wouldn't share the specific positions eliminated, but categorized them as nurses, clerical staff, managers, and nonmedical professional and technical employees. Thursday's job cuts represent 1.2 percent of MeritCare's staff.

About 90 percent of the positions eliminated are in the Fargo-Moorhead area, said Harriette McCaul, chief human resources officer.

In addition, the health system will eliminate 70 employees in transcription between now and Oct. 1. MeritCare clinics in Twin Valley, Minn., and Ulen, Minn., will remain open, but for fewer hours.

The cuts are one step in a long-term plan toward finding more efficient ways to care for patients without sacrificing quality and safety, MeritCare administrators said.

"We have a group looking at areas of cost that few people benefit from," said Dr. Bruce Pitts, executive vice president of clinical services. "We have to make tough choices."

In some cases, clinics were more heavily staffed than recommended by national staffing standards, Pitts said. MeritCare also is looking at consolidating buildings, finding ways to cut supply costsand relying on more automation.

Cutting jobs cuts cost

Cutting costs is the only way to keep the organization viable for another 100 years, Gilbertson said. The health system can't control payments from government-funded programs and private insurers, he said.

For example, hospitals in North Dakota receive less money from Medicare than hospitals in other parts of the nation for doing the same procedures. Labor costs, however, are not considerably lower. Medicare is in the federal health insurance program for seniors and people with disabilities.

MeritCare has lost about $48 million in the past three years because of cuts to Medicare payments, Gilbertson said.

Rising costs of providing services and lower earnings from investments also contributed to the financial dilemma, he said. The health system faces its first unprofitable year in recent history.

The recent merger with the hospital in Thief River Falls, Minn., has not contributed to the current financial situation, he said.

MeritCare strives to keep work-force costs at 60 percent or less of operating revenue. Before Thursday, labor costs and benefits took up 64 percent, MeritCare administrators said.

"The actions of today are a way of safeguarding the organization," Gilbertson said.

Changes made Thursday will save about $9.2 million in salaries and benefits, bringing work-force costs to 62 percent of operating revenue, he said.

Future unknown

Pitts described the mood around MeritCare as sober and anxious since past Monday when media broke the story about staff cuts, three days before administrators planned to tell employees.

"Associates have been concerned about themselves and their co-workers, but patient care hasn't suffered," he said.

Gilbertson said MeritCare doesn't expect more work-force reductions, but acknowledged health-care finances are challenging right now and difficult to predict.

It remains unknown whether MeritCare employees will still receive their raises in October, but Gilbertson said he doesn't think a salary freeze is a good idea.

No decision has been made about salary increases for administrators, he said. Gilbertson said he's willing to take a pay cut, but that wouldn't save the jobs that were lost.

"The point is it's more about symbolism and commitment than saving a job," he said.