St. Mary's Hospital

St. Mary's Hospital in Madison.

M.P. KING, STATE JOURNAL ARCHIVES

St. Louis-based SSM Health, which includes St. Mary’s Hospital in Madison and Dean Medical Group, is cutting 1 percent of its jobs.

The job cuts are in addition to cost savings through attrition and changes in scheduling and workflow, Kim Sveum, spokeswoman for SSM Health in Wisconsin, said Thursday.

SSM Health has more than 35,000 employees in four states, so the total job cuts could be about 350. In Dane County, SSM Health has about 4,500 full-time workers and 2,100 part-time workers, so job cuts could exceed 45.

Sveum declined to provide numbers. Most of the positions affected are administrative, she said.

“Like all health systems, we must continuously evaluate our operations to ensure we are providing services as efficiently and effectively as possible,” a statement from Sveum said. “As a result, we have identified some operational improvements necessary to better meet the needs of those we serve.”

SSM Health also includes Dean Health Plan, St. Mary’s Care Center in Verona, St. Mary’s Hospital in Janesville, St. Clare Hospital in Baraboo and SSM Health at Home.

In July, SSM Health announced plans to acquire Monroe Clinic and Agnesian HealthCare, which includes the hospitals in Fond du Lac, Ripon and Waupun.

Like other health care organizations in the state and around the country, SSM Health has been examining ways to become more efficient as government and private payments for medical services focus more on the value, instead of the volume, of care.

Documents obtained by the Wisconsin State Journal provide some details of how SSM Health has been trying to cut costs.

In January, after experiencing a negative $30 million budget “variance” in 2016, the health system looked at reducing hospital admissions by 5 percent, prescriptions by 2 percent and emergency room visits by 10 percent. That is according to a memo from Damond Boatwright, the Madison-based regional president of SSM Health, Frank Lucia, then president and CEO of Dean Health Plan, and Dr. John Rose, then interim president of Dean Medical Group.

Lucia left in September to take a job in Virginia. Dr. Christopher Sprowl became president of Dean Medical Group in March.

An Oct. 26 memo from Sprowl said the budget “gap remains at $16.86 (million).” The memo calls for referring more patients to Dean specialists instead of doctors outside of the system and a continuing focus on hospital, pharmacy and ER expenses.

“These are not suggestions. These are directions,” the memo says.

An Oct. 10 “SSM Transformation” document discusses various ways to save $15 million, including reducing ER visits, reducing the use of anesthesia and converting some inpatient stays to “observation stays” — hospital care, with an outpatient status, that is supposed to last less than two days.

The document also talks about converting some Dean Medicare supplement plan members to a Dean Medicare Advantage plan.

Another document, from Dean Health Plan, discusses reducing costs from out-of-network hospital admissions, especially at UW Hospital.

St. Mary’s had an operating margin of about $15.4 million, or 3.8 percent, last year, compared with $37.9 million, or 9.1 percent, in 2015, according to the Wisconsin Hospital Association.

Dean Health Plan made $15.9 million last year and $2.3 million the first half of this year, according to the National Association of Insurance Commissioners.

Sveum declined to provide a detailed response to questions about the financial documents or make anyone available to discuss them.

“While our financial outlook remains strong, we must be vigilant in ensuring the long-term sustainability of our ministry,” she said in a statement.

“We are working to reduce inadvertent misuse, underuse or overuse of services. For example, there are times when it may be more appropriate for a patient to be seen in a physician office or urgent care, versus a higher-cost hospital emergency room,” she said.

“By working to make high-quality health care services available and helping our patients find the right setting for them to receive the best care, we are able to make health care more affordable for everyone.”

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David Wahlberg is the health and medicine reporter for the Wisconsin State Journal.