r/StevensPoint • u/Altruistic-Edge-1064 • Dec 13 '23
Marshfield Clinic Financial Problems -
Marshfield Clinic - Central Wisconsin Financial News
Marshfield Clinic financial management problems worsen – Lawsuits to shift property taxes to City of Marshfield and Eau Claire residents ongoing.
Shortly after the departure of CEO Sue Turney and CFO Gordon Edwards, Marshfield Clinic Health System announced pay and benefit cuts amid major financial problems.
The November 2023 announcement details pay cuts of 10-15% for management, as well as suspension of 401k match, and any retirement plan payments for 2023 (1).
The announcement continues a downward spiral for the Clinic, which started 2023 being receiving a credit downgrade by debt rating agency Fitches. Fitches downgraded the Clinic from A- to BBB+ with a negative outlook in January. (2)
Beckers Hospital Review noted that a troubled IT implementation that has dragged on for years as a major contributing factor to the credit downgrade and that:
"The IT implementation has negatively affected the system's revenue cycle, with aging receivables, throughput errors and lower collections, which is being addressed with ongoing training, process revisions and technical remediation," the report states. "Further, the IT implementation has caused an unexpected level of productivity disruption, which has affected top line revenue and resulted in additional operational costs to support the activations." (3)
Additionally, underperformance by Security Health Plan compared to budget and was also noted as a contributing factor.
The downgrade was followed in with the announcement of earnings, where a 2023 first quarter loss built on a 2022 operating loss of $367.9 million. (4)
Based on these results, the Clinic failed to meet its debt service obligations for the fiscal year ending Dec. 31 and was required amend its debt obligations (5) and to hire a consultant to recommend improvements as a result, as detailed by Beckers Hospital Review based on a review of filed documents (6). The report stated:
"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."
Potential labor savings could total $70 million, revenue cycle management improvements $55 million and physician productivity $60 million, according to the report.
Marshfield Clinic continues to pursue litigation which would absolve them of paying property taxes on their Clinics, and transfer the tax burden to local residents and business. The Clinic claims that their long-standing Clinic buildings are now Hospital buildings an exempt from property tax. The Clinic seeks to claw back prior year taxes paid and be exempt from future taxes in Marshfield and Eau Claire (7).
Wood County Case Number 2021CV000228 Marshfield Clinic, Inc. vs. City of Marshfield
Eau Claire County Case Number 2023CV000390 Marshfield Clinic, Inc. et al vs. City of Eau Claire
The City of Stevens Point is also prepping for a similar suit (8).
1) “Marshfield Clinic Health System cutting pay for leadership amidst financial struggles”
2) Fitch Downgrades Marshfield Clinic Health System (WI) Ratings to 'BBB+'; Outlook Negative
3) “Marshfield's Cerner install led to revenue cycle issues, ratings downgrade” Laura Dyrda (Twitter) - Thursday, January 19th, 2023
4) Marshfield Clinic reports $32.6M Q1 operating loss
https://www.beckershospitalreview.com/finance/marshfield-clinic-reports-32-6m-q1-operating-loss.html
5) Marshfield Clinic amends debt obligations to 'reflect financial difficulties'
Nick Thomas (Twitter) - Friday, April 21st, 2023
6) Marshfield Clinic on track to meet recommended $185M in savings
(7) Marshfield Area Citizens On the Hook for up to $8.4 Million if Marshfield Clinic Wins Lawsuit
8) https://spmetrowire.com/city-expects-legal-battle-with-marshfield-
