Originally created 02/13/01

MCG spreads costs of retirement plan



ATLANTA - The Medical College of Georgia will ease the pain of the high costs of its early-retirement program by further spreading out the payments, University System of Georgia Chancellor Stephen Portch said Monday.

Instead of paying nearly $16.9 million a year for 10 years, the program will cost a little less than $16 million annually and be paid out over 15 years, Dr. Portch told members of the House Retirement Committee.

University System financial officials were forced to make up the difference between nearly $170 million, the initiative's original projected cost, and about $240 million, the latest projection, after a consultant substantially underestimated the number of MCG employees who would choose early retirement.

William M. Mercer Inc.'s preliminary report said 60 percent of those eligible would take it. Instead, 88 percent took the package.

On the positive side, lawmakers heard for the first time that MCG Health Inc., the nonprofit that operates the hospital and clinics, is operating in the black less than 18 months after running up a $22.5 million deficit.

Repeating news given to members of MCG Health's board last month, Dr. Portch told the committee that revenues are outpacing expenses halfway through this fiscal year by about $10 million. After putting $4 million back into the academic program, MCG Health will emerge with a $6 million profit, he said.

The chancellor credited the dramatic turnaround primarily to the early-retirement program, which shrank the hospital's patient-staff ratio from 10.2-to-1 to 6.6-to-1.

Dr. Portch said the hospital also has saved money by reducing the average patient stay and by outsourcing the food-service contract.

"We're running it much more like a business," he said. "We're paying a whole lot more attention to bottom lines than we ever have before."

Dr. Portch also defended the early-retirement plan against several concerns that committee members aired during the hourlong session. He dismissed claims that the initiative is primarily a "golden parachute" for high-level employees by producing statistics showing that most of those who took early retirement earned $50,000 or less per year.

He said that MCG is rehiring few former employees, mostly academic researchers who bring grant money with them.

"This is not a shell game," he said.

Jeff Ezell, the executive director of the state Teachers Retirement System, reassured lawmakers that the MCG initiative is not affecting the system's finances. MCG will reimburse any administrative costs to the system associated with the early-retirement plan, he said.

"We're running it much more like a business. We're paying a whole lot more attention to bottom lines than we ever have before."- University System of Georgia Chancellor Stephen Portch, on how MCG is saving money