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Billings Clinic orders doctor pay cuts, retirement plan reductions to save $4.55 million monthly

Billings Clinic
Posted at 6:23 PM, Mar 31, 2023

BILLINGS - Billings Clinic, Montana's largest hospital, is seeking to cut $4.55 million monthly through a series of reductions, including pay cuts for doctors up to 5 percent and suspensions of company contributions to employee retirement plans, according to an internal memo from interim CEO Clint Seger.

The hospital has asked for other cutbacks: a companywide hiring freeze, a halting of all capital projects where possible, a temporary 10 percent pay cut for all hospital executives, a business travel freeze and a reduction in contract labor when possible, according to the memo.

Billings Clinic has already asked departments to make cuts. The effort has saved some money, but, according to Seger's memo, the hospital is recording monthly losses that are "unsustainable."

"Everything is being done with the goal of ensuring the long-term health of our organization so that we can provide the care that our patients and communities need," Seger wrote.

The memo was obtained by MTN News from a hospital employee, who sent screenshots and asked to remain anonymous. The email indicates at the top that recipients could not forward or print the document.

"Billings Clinic faces very real financial hardship. In an effort to fix this mess, they have decided to make changes that will, and have already, reduce the care options provided for patients and also economically impact employees at an already difficult financial time. Their focus seems to have shifted away from mission and towards dollars," the employee said.

MTN is not identifying the employee because the employee expressed fear of retribution from being identified.

A Billings Clinic spokesperson said the hospital would not comment on the memo but did confirm its legitimacy.

It was unclear whether the cutbacks will torpedo Billings Clinic's efforts to become Montana's first level 1 trauma center, a designation that would both increase services available to trauma patients statewide and open the door for Billings Clinic to increase revenue.

It's also unclear the effect these financial problems will have on the announced merger with Kalispell-based Logan Health. The two hospitals announced the merger plan in February with the goal of completing the deal this summer.

Among other plans to shore up the budget, the hospital has signed a contract with an outside firm, US Anesthesia Partners, which Seger said in the email would boost surgical services hospital-wide. During the pandemic, Billings Clinic and other hospitals took a financial hit when non-essential surgeries were canceled.

The memo was not specific about the savings for each cutback, except for retirement contributions. The cutbacks only affect those employees who participate in the hospital's 403b retirement plan, which is akin to a 401k except for nonprofit employers such as Billings Clinic.

The elimination of company contributions would save about $650,000 a month, or nearly $6 million for the calendar year. Billings Clinic has about 4,700 employees, but it was unclear how many use the 403b retirement plan.

Seger cited a couple factors for Billings Clinic's dire financial picture, including a 12 percent national rise in drug prices coupled with flat reimbursement rates and an increase in labor costs from 60 percent to 70 percent of the net revenue per patient.

Billings Clinic is a privately owned hospital and not bound by the same disclosure laws as public entities, such as cities or school districts. So questions remain about the hospital's full financial picture. For example, it was unclear from the memo the size of the hospital's monthly shortfall, and MTN News was unable to ascertain all factors contributing to the hospital's financial losses.

The hospital has undergone management strife in recent months. Seger was appointed interim CEO after the former CEO, Scott Ellner,left abruptly last summer, prompting several other hospital executives to follow. At the time, Seger noted the transition was causing him stress, but he felt the hospital would be okay.

"I really don’t see Billings Clinic as being unstable," he said in August 2022. "I think we have incredible people who work here, at every discipline."

Billings Clinic operates 15 medical facilities in Montana and another four in Wyoming.