SalemNews.com, Salem, MA

Business

September 19, 2012

North Shore Medical loses $14 million

(Continued)

Northeast, however, will benefit from its recent alliance with Lahey Clinic. The Burlington-based organization had a $65 million profit in 2011.

“I think Lahey will continue to be a strong organization,” Hanover said. “We’re budgeting in fiscal year 2013 probably around a 4 percent operating margin for the combined organizations.”

Hanover said there are no planned layoffs “of a significant level” as the two organizations continue to combine, but he could not rule out layoffs in the future.

“As the marketplace adjusts to (changes in how hospitals are paid), we’re going to have to adjust the workforce to reflect that,” he said. “But how that’s going to occur from a timing perspective, or whether it’s going to occur first, is difficult to determine or anticipate.”

The report by the Division of Health Care Finance and Policy noted that hospitals serving a disproportionate number of patients on government insurance, which includes North Shore Medical Center, have been hit particularly hard.

A “disproportionate share” hospital is defined as a hospital with 63 percent or more of patients with Medicare, Medicaid or other government insurance, including the state’s Commonwealth Care program. (About 50 percent of Northeast Hospitals’ patients are on government insurance, according to the hospital.)

Norton said North Shore Medical Center has combined the medical staffs and administrative teams at Salem and Union hospitals and does not separate the profit/loss numbers of the individual hospitals.

“Our mission is to care for everybody in our geography that needs care,” he said, “and that mission won’t change.”

Norton said hospitals will struggle to turn a profit over the next few years while they transition to a new global payment system that seeks to reduce costs by emphasizing coordinated care, as opposed to a fee system that pays doctors and hospitals based on the number of services and tests a patient receives.

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