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Cleveland Clinic Trims Budget to Corral Costs Before Obamacare

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The Cleveland Clinic
The Cleveland Clinic plans to shave 5.5 percent from its yearly spending by tightening operations budgets for things like travel, filling vacancies only where necessary and combining services in areas where there are overlapping offerings, said spokeswoman Eileen Sheil. Photographer: David M. Levitt/Bloomberg

Sept. 19 (Bloomberg) -- The Cleveland Clinic, one of the world’s foremost medical and research centers, is cutting costs and trimming its $6 billion annual budget as patients and providers grapple with health care changes in the U.S.

The clinic plans to shave 5.5 percent from its yearly spending by tightening operations budgets for things like travel, filling vacancies only where necessary and combining services in areas where there are overlapping offerings, said spokeswoman Eileen Sheil. The clinic will offer early retirement to 3,000 employees and may cut jobs if it can’t otherwise reach $330 million in savings for 2014, she said.

The move is designed to help the clinic and its patients prepare for the Affordable Care Act, the $1.3 trillion overhaul passed by Congress in 2010 that’s intended to extend insurance coverage to the nation’s 50 million uninsured citizens. Online health insurance exchanges are slated to open in October, and the overhaul is expected to increase the number of people on Medicaid, the government’s insurance program for the poor.

“We’re seeing a rise in overall health care costs across the country, and the Cleveland Clinic is trying to be proactive,” Sheil said in a telephone interview. “We have to make health care more affordable to patients because the costs are going to fall more on them in the future.”

The clinic’s goal is to update its approach to providing care that fits more with current needs, rather than the existing approach that was designed for users in the 1950s, she said. The organization hasn’t had any layoffs for several years and only cut about 200 jobs during the economic downturn in 2008 and 2009, she said. The new changes are designed to improve efficiency and won’t affect services for patients, she said.

“Through these changing times, we are focused on providing the highest quality of care to our patients in the most efficient and cost-effective manner,” according to a statement.

The Cleveland Clinic’s main campus includes a hospital, a children’s hospital, an outpatient clinic, a research institute and facilities for cancer, eye, heart and urologic care. It has eight community hospitals in Ohio, 75 outpatient locations and facilities in Florida, Las Vegas, Toronto and one slated to open next year in Abu Dhabi.

To contact the reporter on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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