Marshfield (Wis.) Clinic Health System failed to meet its debt service obligations for the fiscal year ending Dec. 31 and was required to hire a consultant to recommend improvements as a result.
Initial conclusions have been made pointing to a possible $185 million in annual cost savings across three areas for the 11-hospital system, a May 26 filing showed. Marshfield Clinic said it is confident of making such annual cost savings due to a number of measures it has already implemented.
The potential savings are in the areas of revenue cycle management, labor costs and physician productivity linked to length of stay numbers, the report showed.
"Further consideration should be given to reducing staffing levels in revenue-producing departments and revenue cycle management departments," according to the report discussing labor expenses. "Additional cost reduction opportunities may exist in employee benefits and should be assessed."
While not commenting specifically on any possible further job cuts, Marshfield Clinic said it is reviewing all the areas the consultant outlined in the report.
"We are already seeing progress, and we are confident that our strategy will help us overcome the challenges that are affecting health systems and hospitals across the U.S.," a Marshfield spokesperson told Becker's. "After a thorough and transparent review, the consultant agreed that our targets are achievable and the strategy we’ve implemented is the right one, and in line with what they would have recommended."
Both labor costs and revenue cycle efficiencies compare unfavorably with peer health systems, the report said.
Potential labor savings could total $70 million, revenue cycle management improvements $55 million and physician productivity $60 million, according to the report.
Marshfield Clinic, which is on track to merge with Duluth, Minn.-based Essentia Health, has said it will have any debt service waived for the first quarter of 2023. The system has also made significant job cuts and had credit ratings downgraded in recent weeks.
Editor's note: This update from the original May 26 story reflects additional comments and context from Marshfield.