CEO: UMMMC adjusting to higher costs, declining caseload

Photo/Michael Novinson UMass Memorial's CEO Eric Dickson said the health care system is struggling under the weight of a $140 million annual bill for employee health insurance

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By Sunny Zheng

The CEO of Central Massachusetts’ largest health-care provider says government and business need to come together to push down rising health insurance costs.

Eric Dickson, the top executive at UMass Memorial Health Care, said the Worcester-based system is struggling under the weight of a $140 million annual bill for employee health insurance, amounting to $14,456 spent on each of UMass Memorial’s 13,000 workers.

Dickson addressed the financial difficulties UMass Memorial is facing due to changes in the health market before a gathering of about 400 this morning at a Worcester Regional Chamber of Commerce breakfast at The Manor in West Boylston.

“UMass Memorial Health Care can’t afford $14,456 per employee for health insurance, and I’m sure the businesses you run can’t afford it either,” Dickson said.

Dickson said the industry is shifting from an emphasis on inpatient care to preventative services and wellness, and urged businesses to promote exercise, healthy eating and regular checkups for their employees.

A rise in overall wellness would reduce the costs associated with treating patients covered by Medicare and Medicaid, which currently comprise 56 percent of UMass Memorial’s caseload. Dickson said low federal reimbursement rates mean the health care system loses money treating people on government health care, forcing UMass Memorial to make up for it by raising rates on its commercial customers.

A decreased need for impatient care has prompted UMass Memorial to make staffing cuts, Dickson said. The health care system has announced the elimination of 353 positions since October, when the health care system reported a $55 million operating loss for the 2013 fiscal year. Further adjustments are likely, Dickson said.

For the second time in less than three months, UMass Memorial had its credit rating downgraded last week by Moody’s Investors Service to Ba1, which Moody’s describes as a “speculative” grade. Dickson said in a blog post Monday that he hopes to have the health care system in a better place financially by Oct. 1, the start of their 2015 fiscal year.

UMass Memorial is Central Massachusetts’s largest employer.