Mayo Clinic Health System announced it plans to consolidate services among its Albert Lea and Austin, Minn. hospitals. The system said staff shortages, rising costs and falling reimbursement were the reasons for the consolidation plan.
The hospitals are about 25 miles apart. The Austin facility will handle all inpatient services, as well as offer outpatient care. The Alert Lea facility will handle primary and specialty care, emergency care, behavioral health, pharmacy and other services.
System officials found that outpatient makes up 95% of services at the two facilities.
Mayo Clinic chose the Austin facility for inpatient services because it “offers the best layout for the expansion of hospitals rooms, a larger intensive care unit and room for additional growth, making it the right choice for housing all of these services in one location.”
Bobbie Gostout, MD, vice president, Mayo Clinic and leader of Mayo Clinic Health System, said the system need to make changes.
“It’s no longer feasible to duplicate some of our most complex and expensive healthcare services in neighboring communities. We are navigating challenging times in healthcare, so we are taking proactive steps to adjust the services offered on each campus,” said Gostout.
Mayo Clinic officials said the consolidation will make better use of staff and resources. The move will also let them invest more in technology and equipment.
System officials said the consolidation will take several years and needs further planning.
Hospital systems ranging from internationally known facilities like Mayo Clinic to small rural community hospitals are all trying to find ways to improve their financial situation. A recent report from PricewaterhouseCoopers’ Health Research Institute found that medical costs have been consistently between 6% and 7% for the past four years and is expected to grow 6.5% in 2018, which is faster than inflation. The report also found that outpatient medical costs have increased since 2008, a trend Mayo likely noted in coming to its decision. Consolidation is one avenue that many hospitals are trying or exploring as an option to help with finances.
Two issues facing hospitals are lower reimbursements and fewer admissions, which Mayo Clinic both mentioned as reasons for the consolidation. Four hospitals recently announced that they are closing or laying off employees at least in part because of sagging reimbursements and declining admissions.