The hospital and clinic chain found that layoffs and benefit reductions won't cover the revenue shortage.
In another sign of the financial crunch in health care providers, Fairview Health Services said Wednesday it plans to freeze 2009 wages for all employees in hopes of saving $24.5 million.
The latest cost reductions by the Twin Cities area's second-biggest hospital and clinic chain come after layoffs, reduced pension contributions and new limits on banked vacation were not enough to match the shortfall in revenues as the economy deteriorated.
Fairview now hopes to save $15.6 million by eliminating 2009 pay increases for non-union workers. Another $5.6 million would come from unionized workers and $3.3 million from incentive payments to managers. Most of the increases were scheduled for May 1.
Fairview still is negotiating the move with its unions, spokesman Ryan Davenport said Wednesday.
Fairview, which owns the University of Minnesota Medical Center, has 22,000 employees and revenue of $2.3 billion in 2007. It is expected to announce its 2008 financial performance on Friday.
Others have frozen pay
Fairview isn't the only operation looking for savings at a time when the economy is forcing people to put off elective procedures and more hospital bills are going unpaid. Like other companies and foundations invested in the stockmarket, hospitals have also suffered big investment losses. At the same time, their borrowing costs have risen as the credit markets seized up.
Allina Hospitals and Clinics, the metro area's biggest health care chain, is freezing executive pay for vice presidents and up but has no plans to freeze staff pay, said spokesman David Kanihan.
Park Nicollet Health Services, which owns Methodist Hospital, has also frozen 2009 wages for all non-union employees. Park Nicollet also is cutting pay for clinicians by 3 percent, on top of any pay decrease related to fewer patients. Nor will there be any year-end incentive payments for management and senior executives, said spokesman Jeremiah Whitten.
HealthEast Care System, which owns Woodwinds, St. Joseph's and St. John's Hospitals in the east metro area, is monitoring its budget closely but has no plans to freeze pay, said spokeswoman Jodi Ritacca.
Metro hospitals earlier eliminated more than 1,000 jobs, including firing nurses. On Tuesday, Park Nicollet Health Services, which owns Methodist Hospital, said it would cut 26 licensed practical nurses by May 1 because of fewer inpatients.
Chen May Yee • 612-673-7434