Rockwood Clinic faces budget deficit

Rockwood Clinic is struggling with a mild budget deficit and has clamped down on discretionary spending such as holiday parties, gifts and cards, a golf tournament, and administrative bonuses.

Perhaps the most significant is a spending freeze for new positions and careful scrutiny before filling vacant positions.

In an e-mail to the clinic’s approximately 900 physicians and staff, company president Dr. Kevin Sweeny outlined the cutbacks and asked for help as the region’s largest clinic tries to ensure that it enters 2008 with a strong bottom line.

It’s a tough task as the clinic, with 22 medical offices in the region, completes the implementation of a new electronic health records system that is more difficult and costly than anticipated.

The complexities of the new system have led to some cost overruns while at the same time slowing the number of patients that the clinic can treat. This combination of higher costs and slowing revenues has the clinic paying special attention to where its other dollars are spent, too.

Sweeny said the clinic’s annual revenues total about $100 million. The profit margin, however, hovers around 1 percent, leaving little room for error.

“We must be very, very careful,” he said, adding that the clinic still strives to pay competitive wages and offer good benefits to keep and recruit staff.

The clinic, which has more employees than Holy Family Hospital, was founded in 1930. Its main office on East Fifth Avenue opened in 1987, and today the clinic serves about 120,000 patients each year.

The budget issues, Sweeny said, have not affected the clinic’s ability to serve patients nor have they encroached on Rockwood’s commitment to serve elderly and poor patients.

He said Rockwood remains strong and is trying to act prudently to avoid problems later.

“We’re proud of what we as an institution do here,” he said.

Treating such patients often means taking a financial loss because of low reimbursement rates or unpaid bills.

“That’s a tremendous cost,” he said, adding “to be frank, I don’t care. We treat everyone.”

In his e-mailed memo to staff, Sweeny said he hoped to restore some of the cuts next year, “but that will depend on our fiscal health at the time.”

The problems faced by Rockwood are similar to those of other clinics and hospitals that are trying to invest in new technologies, pay competitive wages, wrestle with billing issues and fund higher-costing employee benefits.

For example, Sweeny said, the cost to the clinic for employee health care coverage recently rose by $500,000.

Absorbing such costs means money will be tight elsewhere.

Rockwood will curb the number of community-funded sponsorships, reduce lunch and dinner meetings, and cancel meeting venues that require catering, deposits or fees.

Clinic management will meet Monday to talk about business strategies to bolster finances.