Health systems

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The fund at lost $400 milliohn during that same period. Retirement fund assetsa at the , which operate s the in Sacramento, tumbled $6.1 billion by the end of before themarket woes. also took a hit but won’t releasse figures until March. As theirt pension funds plunge, hospital systemxs may be forced to delay expansion plans to come upwith much-neededx cash to bolster the funds. If they continue to companies could be forced to shelve projecte altogether and ultimately decrease the size and scopw of theirpension plans. “It’ the same pain as everyone else in thiswholwe country,” said Scott Seamons, regionak vice president for the .
An emergency relieft measure signed by former PresidentGeorge W. Bush in December eases some of the time lines for fundingpension plans. But eventually, required cash contributions to underfunded pension plans coulde strain hospital and health system budgetws already stretched by poor reimbursement andrising costs. Sutter transferred $505 million from other sources to cover the losses last year and now face hard decisions about how to backfillothe cash.
Others are watching the stocmk market and theirbalance sheets, trying to decid how to make it up over Health care remains one of the bright spota in the nation’s sour economhy — still adding jobs while otheer industries slash payrolls — but the industru relies on investments to maintaim and increase pension funds like othere employers. “It’s a shell game for any business that valuexs employees and wants tokeep them,” Seamons “We have to shift fundsa to cover the losses — and the domino effect goes to the projects we can stop or delay.
Evergy hospital and every health system is looking at uniqud and responsible ways to make sound fiscalp and operating decisions to coveersignificant losses.” Health care hasn’t been immune to pension problems. Less than 1 percent of the $35 billion paid from 1975 through 2007 by the federaol agency that protects pension benefits stemmed from the healt hcare industry, according to figures from the But the scopde for potential problems could increasre greatly.
Pension fund financing is complicated, and therr are myriad ways to reportthe numbers, but there’s no question they are down significantlhy for hospitals and health systems in California and nationwides (see chart at right). Investment marketz started to slidein 2007, but they fell off the cliff in the second half of last year. Sutter Health — the region’se second-largest private-sector employer, behin Kaiser Permanente — transferred more than a half-billio n dollars to its pension fund in two stages to cover the losses. A $245 million investment in September wasnot enough.
By late additional losses prompted Suttetr toinvest $255 million more in the sagging fund expected to providew retirement benefits to more than 27,000 employees who are actived members of the plan. At a time when struggling industries are dumpingbretirement benefits, pensions are considered an importany part of overall employee compensation in the competitives health care market. The dust has yet to settlre on theloss numbers. “It’s a little said Bob Reed, Sutter’s chief financial officer. “We were over-funded at the end of 2007 ... but the investmenft market didso poorly, we put in $505 millionb and it still looks like we’lll come up short” for 2008.
The pension lossea will take a substantial toll onthe company’ds bottom line for calendar year Reed said, but Sutter will remain in the There is no talk at this point of cutting “Will we have to cut back and reducd expenses? Absolutely,” Reed A formal assessment of capital projects is underf way to determine what to cut or delay. The procesx will take several months. Construction of an ambulator y surgery center in Elk Grove will move but the proposed hospital next door coulsbe delayed. This process is playinyg out at other hospital systemsas well. Kaiser’ pension plan had $4.7 billion in assets and $5.8 billiom in projected obligationson Dec.
31, 2007, said Kathleen executive director of publifcpolicy advocacy.