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Minnesota hospital ailing in recession

Marketplace Staff Jan 26, 2009
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Minnesota hospital ailing in recession

Marketplace Staff Jan 26, 2009
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KAI RYSSDAL: Last month we started an occasional series looking at how two very different towns — one in California, the other in Minnesota — are handling the recession.

Today we’re going to take you back to Edina, Minn. It’s a suburb of Minneapolis, fairly affluent, where the fallout from the financial crisis has been slow to arrive. But more than a year into this recession, the economy’s finally starting to make its mark. Local industries that ducked the last recession aren’t faring so well this time around.

Minnesota Public Radio’s Annie Baxter checked in with Edina’s biggest employer.


ANNIE BAXTER: A lot of people head to France Avenue in Edina for the malls, high-end boutiques and trendy restaurants. But some people come for other things, like plastic surgery, antibiotics, or an emergency room visit. The street is home to several medical clinics and Fairview Southdale Hospital. With 2,300 workers, Fairview Southdale is the town’s biggest employer and one of the main engines of Edina’s economy.

Inside, Fairview Southdale patients’ call buttons ring. Doctors and nurses whiz down the halls.

NURSE: Station 33, this is Peggy, can I help you?

But some parts of the hospital are a little slower lately. Health care is usually pretty recession proof. But as this recession deepens, patients are holding off where they can — like on knee surgery.

Bradley Beard is president of Fairview Southdale Hospital and Clinics.

BRADLEY BEARD: We’re probably down in our elective cases somewhere between 5-8 percent in the last three months.

Baxter: Is it possible to put a dollar figure on what that means then?

Beard: It probably is about a half a million dollars.

Beard says Fairview Southdale and other hospitals are getting squeezed in a lot of other ways, too.

BEARD: Health care in general is experiencing lots of pressures in terms of declining reimbursement, supply costs . . . and other costs continue to rise quickly — technology. So as a result our margins are extremely thin.

And getting thinner. And that’s happening throughout the hospital’s parent company, Fairview Health Services, which operates dozens of facilities around Minnesota. The changes are costing jobs. In an uncommon move, Fairview Southdale laid off about 50 employees last fall, most of them administrative. Many hospitals around the country are also handing out pink slips.

DAN LOVINARIA: Health care used to be the area where it’s a safe job, but that’s not true anymore, I think, personally.

Dan Lovinaria is a nurse anesthetist. He’s dressed in blue scrubs and clutches a bag of syringes. Lovinaria works at Fairview Southdale and moonlights at other area hospitals. He also teaches.

Lovinaria sees that hospitals all around the area are treating fewer patients. So he’s telling his students to brace for a tough job market, and he’s offering this advice:

LOVINARIA: You not only have to be good, you have to be great in order to remain competitive in this field.

Economists have some theories about why health care is feeling the recession this time around. Stephen Parente teaches at the University of Minnesota’s Carlson School of Management. He says a lot more patients have health plans with high deductibles than during the last recession. So those patients are covering a bigger chunk of their own health insurance costs. And as the economy gets worse, they’re avoiding the doctor’s office.

STEPHEN PARENTE: Increasingly over the last six or seven years, there’s been increased cost sharing, whether it’s high deductible health plans, increases in co-payments, increases in co-insurance and so that’s creating a tension.

But hospitals like Fairview Southdale in Edina have a secret weapon — their towns’ senior citizens.

In the next 10 years, the number of Minnesotans turning 65 will grow by 60 percent. And Edina is the most rapidly-aging town in the Twin Cities metro area.

That makes Edina’s Mayor Jim Hovland, pretty confident that the hospital won’t be hurting for patients.

JIM HOVLAND: All these medical providers will continue to prosper and continue to provide the highest quality medical care these folks are going to need as they age.

And it turns out Hovland is one of the silver-haired residents with medical needs.

HOVLAND: I tore some cartilage in my knee. I’ve got to have knee surgery, so I’m kind of holding off. Not because of any economic reason. I just have to find the time to get it done.

BAXTER: I think the hospital would like to see you.

Whatever patients’ reasons for deferring a trip to the hospital now, Fairview Southdale’s confident they’ll eventually come hobbling in, recession or no recession.

In Edina, Minn., I’m Annie Baxter for Marketplace.

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