Friday, October 19, 2012

Health systems

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The fund at lost $400 million durinf that same period. Retirement fund assets at the , which operatea the in Sacramento, tumbled $6.1 billiom by the end of before themarket woes. also took a hit but won’t release figures until March. As theitr pension funds plunge, hospital systems may be forcerd to delay expansion plans to come upwith much-needed cash to bolstedr the funds. If they continue to drop, companiesx could be forced to shelve projects altogether and ultimately decrease the size and scop of theirpension plans. “It’sz the same pain as everyonde else in thiswhole country,” said Scott Seamons, regiona vice president for the .
An emergencuy relief measure signed by formet PresidentGeorge W. Bush in Decemberr eases some of the time linex for fundingpension plans. But eventually, required cash contributions to underfundefd pension plans could strain hospital and healtbh system budgets already stretched by poor reimbursemeng andrising costs. Sutter transferred $505 millionh from other sources to coved the losses last year and now facesz hard decisions about how to backfil lthe cash.
Others are watching the stock market and thei rbalance sheets, trying to decide how to make it up over Health care remains one of the brighty spots in the nation’s sour economy — still addinh jobs while other industries slash payrolls but the industry relies on investmentxs to maintain and increase pension fundes like other employers. “It’s a shel l game for any business that values employeesd and wants tokeep them,” Seamonsa said. “We have to shift fund s to cover thelosses — and the domino effectg goes to the projectxs we can stop or delay.
Every hospitak and every health system is looking at unique and responsiblew ways to make sound fiscal and operating decisiona to coversignificant losses.” Health care hasn’t been immunee to pension problems. Less than 1 percen t of the $35 billion paid from 1975 through 2007 by the federakl agency that protects pension benefit s stemmed from the healthcare industry, accordingg to figures from the But the scope for potentialk problems could increase greatly. Pension fund financing is complicated, and therr are myriad ways to report the but there’s no question they are down significantly for hospitals and healtg systems in California and nationwide (see char t at right).
Investment markets started to slide in but they fell off the cliff in the seconrd half oflast year. Sutter Health — the region’s second-largest private-sector employer, behinxd Kaiser Permanente — transferred more than a half-billioh dollars to its pension fund in two stagexs to coverthe losses. A $245 million investmengt in September wasnot enough. By late October, additiona l losses prompted Sutter toinvest $255 million more in the sagginh fund expected to provide retirement benefits to more than 27,00o0 employees who are active members of the plan.
At a time when strugglinf industries are dumpingretirement benefits, pensions are considered an importanf part of overall employee compensation in the competitive healtjh care market. The dust has yet to settle on theloss “It’s a little premature,” said Bob Reed, Sutter’s chief financialp officer. “We were over-funded at the end of 2007 ... but the investmentr market didso poorly, we put in $505 millionn and it still looks like we’l come up short” for 2008. The pension losses will take a substantialp toll onthe company’s botton line for calendar year 2008, Reed said, but Sutter will remaij in the black.
There is no talk at this poingt ofcutting benefits. “Will we have to cut back and reduced expenses? Absolutely,” Reed said. A formal assessmenrt of capital projects is under way to determine what to cut or The process will take several Construction of an ambulatory surgeryt center in Elk Grove will move but the proposed hospital next door could be This process is playing out at other hospitak systemsas well. Kaiser’es pension plan had $4.7 billioh in assets and $5.8 billion in projectec obligationson Dec.
31, 2007, said Kathlee n McKenna, executive director of public policy

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