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Analysis

M Health Fairview Considers Staffing Cuts, Hospital Closures

By John Commins  
   November 25, 2019

The health system is looking for ways to address a projected $80 million net loss in 2020.

Two months after entering a joint clinical agreement with the University of Minnesota, M Health Fairview is considering layoffs that could trim 500 positions – about 2% of its staff – from the payroll.

StarTribune.com, citing internal memos from University of Minnesota President Joan Gabel and Fairview Health CEO James Hereford, said the staff cuts is one of several strategies contemplated over the past several weeks to address a projected $80 million net loss in 2020.

"The decision by Fairview to lay off employees is incredibly difficult," Gabel wrote. "There are sound financial reasons why this action is necessary, but it does not lessen the pain employees will feel or the concern that patients may have due to this news."

Other strategies to improve margins could include reducing operations at the health system's Bethesda rehabilitation hospital and shuttering the financially struggling St. Joseph's Hospital in downtown St. Paul, the newspaper reported.

Hereford did not dispute the newspaper's report but declined to provide further details in a statement to HealthLeaders.

"Healthcare is facing an affordability crisis and we must transform," he said. "We are rethinking everything we do to prepare for a future where we approach healthcare differently. This change requires innovation, courageous leadership and, inevitably, choices. We will do what's right for our most important constituents: our patients."

The staffing cuts would likely take effect in early 2020, and most would target unfilled positions, as opposed to layoffs. The potential closure of St. Joseph's could occur within the next three years. The money losing hospital was converted in 2017 to a mental health hospital. St. Joseph's lost $32 million in 2017 and $44 million in 2018, the newspaper reported.

"The affordability crisis that consumers are facing right now — it really does demand and give energy to the necessity of health care delivery transformation," Hereford told the paper. "Health care has played the blame game and tried to deflect and say its been somebody else's fault. We're not going to do that."

Fairview Health merged with HealthEast in 2017, and entered a joint clinical agreement with the University of Minnesota on Oct. 1.  

“Healthcare is facing an affordability crisis and we must transform.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The staffing cuts would likely take effect in early 2020, and most would target unfilled positions, as opposed to layoffs.

Other strategies could include reducing operations at the health system's Bethesda rehab hospital and shuttering the financially struggling St. Joseph's Hospital.


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