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MeritCare's financial prognosis improved

FARGO - Administrators at Fargo-based MeritCare say efficiency steps including job cuts have staunched financial hemorrhaging and the medical system expects to end its fiscal year in healthy fiscal condition.

The prognosis came this week as MeritCare executives spoke about their ongoing efforts to adapt to rising health costs and lean reimbursements from insurers.

"We've turned now," said Dr. Roger Gilbertson, MeritCare's chief executive officer. "We're above the water line, so we look forward to gradual improvement."

In late June, MeritCare announced it would save $9.2 million by eliminating 210 positions, some vacant, and reducing hours for another 90 employees.

A satellite clinic in LaMoure, N.D., also was closed.

"We're no longer hemorrhaging as we were," said Dr. Bruce Pitts, MeritCare's executive vice president of clinical operations, adding, "We have a lot more work to do."

Transitional care services in the hospital were eliminated, and now MeritCare physicians direct that care in nursing homes, which are better equipped for that type of care, Pitts said.

"That's the only service that we've actually curtailed," he said, adding no further curtailments are expected. "We may be shrinking some programs and expanding others."

A few encouraging signs show progress, Pitts said. For instance, payroll costs, which last winter were about 64 percent of net revenues, have been pared to 60.5 percent, just a hair above the 60 percent target level, he said.

Challenges will remain steep as an era of escalating health costs and lagging insurance reimbursements continue, Gilbertson and Pitts say.

MeritCare, which has about 50,000 emergency room visits a year, is effectively the county hospital for the region, Gilbertson said, with unreimbursed care adding to the financial strains.

Payments must be enough to maintain the health system for a population that is both growing and aging. "The whole ecosystem's got to work," Gilbertson said.

Another looming challenge: replacing retiring doctors, whose successors might not be as willing to work the 80-hour work weeks that many physicians put in with their call schedules.

Doctors approaching retirement could keep working, but many would like to avoid call schedules that are more taxing for older physicians. Still, there are no easy remedies.

"This is an ongoing battle," Gilbertson said of the gap between reimbursements and costs.

MeritCare continues to work with an accrediting body, but has conditional accreditation pending the outcome of several appeals before the Joint Commission.

As of July, MeritCare was working to address 23 "recommendations for improvement," and has addressed most areas, including several items it contended met compliance. Several other areas remain under review, but accreditation is not in question, Pitts said.

"I know we're in compliance with those standards," he said of those pending appeal. Although the report identified some legitimate criticisms, "We're not at risk of losing our accreditation at this time," Pitts said.

Forum reporter Erin Hemme Froslie contributed to this story.