Allina says it will cut between 250 and 350 jobs

The cuts were blamed on financial difficulties, including rising bad debt.

By MAURA LERNER, Star Tribune

Last update: October 3, 2008 - 8:53 PM

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Allina Hospitals & Clinics, the Twin Cities' biggest medical group, confirmed Friday that it is eliminating 250 to 350 jobs because of growing financial pressures.

Allina, which has more than 23,000 employees in Minnesota, this week started notifying workers affected by the cutbacks, which will reduce the workforce by 1 to 1.5 percent, Allina spokesman David Kanihan said.

Kanihan said that the reductions will cut across many job categories and include the company's chief administrative officer, Gary Strong, who has only been on the job since July 2007.

The company will try to minimize layoffs by reducing staff through attrition and leaving openings unfilled, Kanihan said. He also said that some displaced workers should be able to find jobs within Allina's 11 hospitals and more than 60 clinics.

Kanihan blamed the cutbacks on a combination of financial difficulties, including rising bad debt and expected cutbacks in state reimbursement rates. This year, Allina has seen a 28 percent increase in "uncompensated care," which includes bad debt, charity care and discounts to the uninsured, he said.

As of August, Allina reported $116 million in uncompensated care, compared with $90 million in the same period last year.

"The bottom line is we're in a challenging financial environment," Kanihan said.

"Turmoil in the financial markets doesn't help. Our investment portfolio is not doing as well as we had anticipated, just like everybody else's." He said Allina's return on investment has declined nearly 6 percent, or $28 million.

At the same time, he said, Allina may end up adding jobs in the coming months as it invests in projects to improve patient care. One of those projects is creating a new category of health worker, known as "care navigators," to help patients "navigate the system."

He declined to say what categories of employees would be most affected by the current cutbacks.

In January 2007, Allina cut 350 jobs, mostly at Abbott Northwestern Hospital.

"Obviously, things like this are a last resort," Kanihan said.

Maura Lerner • 612-673-7384

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