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Hospital Chiefs: Cut Costs with Care

John Commins, for HealthLeaders Media, February 8, 2013

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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4 comments on "Hospital Chiefs: Cut Costs with Care"


Frank (2/23/2013 at 1:52 PM)
Isn't it better to push for higher taxes and premiums rather than cut spending in vital areas?

ERASTOTHENES DE ALEJANDRIA (2/22/2013 at 12:53 PM)
Any type of effective management requires the participation of all members of the Organization, making all them responsible for the success that management and results. The remuneration of employees should be adjusted to the work done and achieved savings. Only when the employee see that his effort is rewarded, it will continue in that effort.

ERB (2/13/2013 at 1:24 AM)
Start cutting the force flu vaccine! Between the cost and ALL the advertizing trying conveince us the are needed{LOL} and r for patient safey{LOL} they could use the $ on something that is really needed