Cutting With Care

John Commins, January 15, 2013

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?

This article first appeared in the January/February 2013 issue of HealthLeaders magazine.

 

Chris D. Van Gorder
President and CEO
Scripps Health
San Diego

Chris D. Van Gorder
Chris D. Van Gorder

On budget cuts in a changing landscape: It's hard to know how much needs to be pulled out of operating budgets yet, and it will be an issue dictated by federal, state, and local reimbursement cuts and competitive issues. I think many organizations will need to reduce their operating budgets between 10% and 20%—some maybe even.

On the need for transparency: It's important to be open and transparent with employees about these issues and to engage them in the process of reducing costs. It's also critical that physicians be engaged in the process with management. Everyone wants a successful organization and wants to continue the mission so it's critical to engage everyone in the process. We have to do everything we can to protect jobs right now.

Why would any employee help to reduce costs or engage in the process if that means they will lose their own job?

On morale and displaced employees: We place any employee impacted by a position elimination into a career resource center. While we can't always promise the same job or the same work location, we can help an impacted employee find another position in the organization. The key to maintaining employee morale is to do everything we can to retain jobs while we design new work processes that will be more efficient, eliminate waste in operations, and restrain hiring so we have positions in which to place loyal Scripps employees who have their jobs impacted by these changes.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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