Northfield Hospital & Clinics is reducing hours for some employees, transferring others within the organization and laying off of another dozen workers to fend off a projected $1 million budget loss brought on by changes in the health care industry.

In a Wednesday release, the health system announced it's not replacing six vacant positions. For 30 employees, the hospital plans to reduce working hours or reassign them within the organization.

The health system said it is not releasing where the changes are being made out of respect for staff.

The changes are expected to take place along with managing operating expenses and growing revenue where possible. Hospital officials traditionally strive for a 3% profit in most years but have settled for a 2% next year, meaning they had to find $3 million in either revenues or cuts.

Northfield Hospital & Clinics CEO Steve Underdahl said the changes are needed due to a decline in the number of inpatient days and some surgeries, and procedures moving to outpatient care. He added insurance company restrictions have resulted in the mandatory use of ambulatory surgery centers for some services and an aggressive prior authorizations process. He said high-deductible health plans are resulting in patients delaying or forgoing treatment, engaging in more price shopping and being saddled with an increase in bad debt. There have also been cost increases for drugs, some supplies and talent.

Steve Underdahl

Underdahl

The hospital in 2019 grappled with a $320,000 loss in operations income through November. It ended last year with a positive operations income of $126,000. The average length of stay in 2018 decreased from 2.42 days to 2.23. Admissions dropped from 1,942 to 1,710 and the number of inpatient days decreased from 4,707 to 3,806.

“NH+C engaged an outside expert to help review our organization structure and size compared to other health care institutions,” Underdahl said. “We learned that our structure has had the benefit of in-house roles that most organizations our size don’t have. We are reshaping and realigning senior leadership to align with best practices among health care organizations our size. These changes are based on roles, not on individuals.”

“Eliminating some leadership roles allows us to maintain more direct patient care positions.”

Despite the reductions, Underdahl spoke positively of the city-owned hospital’s financial status.

“NH+C is a healthy organization adapting to business conditions and on-going shifts in health care,” he said. “The goal is that NH+C continue to thrive as an independent organization and be a resource for our community for the next generation.”

In an email, Mayor Rhonda Pownell, who is also a member of the Hospital Board, said the city is "fortunate to be home to a thriving locally owned and operated hospital."

"Our Northfield Hospital & Clinics administration and our Northfield Hospital Board have been diligently working to pursue solutions to the changing health care market that will enable the organization to remain strong and healthy well into the future," she said. "Staffing reductions are never easy decisions to make, but I am confident that they are being made with great care and careful analysis."

Reach Associate Editor Sam Wilmes at 507-645-1115. © Copyright 2020 APG Media of Southern Minnesota. All rights reserved.

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