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Cutting with Care

John Commins, for HealthLeaders Media, February 13, 2013
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This article appears in the January/February 2013 issue of HealthLeaders magazine.

In our October Intelligence Report, 19% of leaders said that they still need to pull 11% or more out of their operating budget. When making budget cuts, especially deep cuts, what can the C-suite do to avoid harm to quality care and staff morale?

Terrie P. Sterling
Executive vice president and COO
Our Lady of the Lake Regional Medical Center
Baton Rouge, La.

The first thing you already should have in place is a good communication channel. We have two strategies that we use a lot. One is town hall forums, face to face with an executive. We developed a script in those town hall meetings to ensure that specific topics are discussed. Every year, as we have seen it coming, we have talked about everything from value-based purchasing to changing reimbursements to the impact of the current climate. It sets the tone and informs your staff in real time about what is going on through true communication and sharing.

Second, we have a controlled blog that has an online Q&A with me. For example, as we manage labor productivity and overtime, we talked about Medicaid cuts and the reasons why we have to review labor productivity to get to better, lower benchmarks. And as we are managing overtime, we talked about every department being a target.

Establishing trust and communication long before you need it in difficult times is what you have to do; be transparent and honest. I expect to be able to explain to our 5,000 team members what we are doing in simple terms and our rationale and how it fits our values and how we are going to do it. Thus far we have been able to hold to those principles.

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