MERCY HEALTHCARE: Sacramento System Sees Continued Losses

      Mercy Healthcare Sacramento has been "hemorrhaging" more than $1.7 million a month in operating losses -- mostly from "the doctor side of the business" -- for a total of $15.3 million in red ink since July 1998. The Sacramento Business Journal reports that Mercy's "aggressive turnaround plan," comprised of layoffs and "other budget-cutting initiatives kicked off early this year," so far has not stemmed the flood of red ink caused by lowered reimbursements from health plans and the government. Michael Wilson, CEO of the CHW Medical Foundation, which is affiliated with Mercy parent Catholic Healthcare West, said, "The turnaround stuff is taking a little longer than expected. It's fair to say that our medical groups continue to lose money -- and that's the trend across the country." Mercy's sagging physician practice business is not unique. Bill Sandberg, executive director of the Sacramento-El Dorado Medical Society, said, "For every dollar earned, they spend two. The economies of scale, bargaining power and savings that people anticipated just haven't happened." In an attempt to smooth relations between its medical group and hospital business, Mercy hired a new CEO, former Woodland Healthcare COO Bill Hunt, "to oversee both hospitals and doctors." He said, "I don't do magic. The question for me is how to create an aligned system that allows us to solve problems together -- from one that is loosely collaborating today" (Robertson, 5/3 issue).