Memorial Health Halts 401(k) Match
December 31, 2010 (PLANSPONSOR.com) - Memorial Health will suspend its matching contributions to employees’ retirement accounts for at least a year, beginning February 1.
Calling the choice “a very difficult decision”, Phillip S. Schaengold, Memorial’s president/CEO, informed employees by letter dated Monday, according to the Savannah Morning News, and noted that the projected savings from the move will be about $4.4 million.
About 4,500 system employees, who began receiving the letters Wednesday, also were informed the system — parent corporation of Memorial University Medical Center — will defer merit payments next year as part of the “hospital-wide expense reduction action steps,” the letter stated, according to the report. The letter acknowledged that merit increases have been frozen for the past three years. The merit freeze was chosen to “permit us to save a number of positions and avoid a reduction in critical programs,” the letter stated.
As for that 401(k) match, Schaengold’s letter stated “It is my hope that we will be able to restore both merit increases and the 401(k) employer matching contributions in 2012.”
Schaengold cited an anticipated “little if no increase in reimbursements from third-party payers and relatively modest volume growth” at the same time as an expected “continuing demand to provide record amounts of uncompensated care.” Memorial Health expects to lose about $12 million systemwide, with an anticipated $2 million profit for the hospital itself next year, according to the report.
“The financial challenges facing Memorial are not unique to us and should not detract us from our commitment and responsibility to providing outstanding and safe care to all of our patients,” Schaengold’s letter said.