This has been a rough year for Boca Raton Community Hospital, but they've still found a way to celebrate the holidays.
The 394-bed, acute-care hospital reported losses of $110 million in fiscal 2007/08, with anticipated losses of $30 million for the current fiscal year. Some of the losses were owing to the bad economy; some were owing to bad business decisions that have forced the hospital to go through three CEOs in less than one year.
Last week, in the shadow of the holiday season, and after months of rumors and very public speculation in the media, 39 employees mostly in administrative and support areas were laid off, 20 vacant positions were eliminated, and 40 employees had their hours trimmed back to avoid more layoffs.
Brian Altschuler, executive director of Human Resource Operations at BRCH, says that though layoffs had been expected, the 1,900 employees who remain are still grappling with the loss of their friends and colleagues. "People tend to forget you have two different groups of grieving people, the severanced employees and the employees who remain," Altschuler says.
In this environment, senior leadership at the 41-year-old hospital tried to find an acceptable way to celebrate Christmas; a toned-down celebration that would reassure and express appreciation for the remaining employees without spending lavishly. "Just like in any other mourning, or any other loss, a lot of times you will see families continue a tradition because that is what the person would have wanted," he says.
After speaking with employees, the decision was made to cancel the hospital's traditional Christmas party, a hospitalwide annual gala for full- and part-time employees and their families that had been budgeted at around $100,000. "We surveyed our employees. We didn't just make that decision," Altschuler says. "We did focus groups because we felt like, while we may think we know as leaders what our employees want, we wanted to make sure we clearly understood through communication what they wanted."
Altschuler says the employees made it very clear that they did not want an annual Christmas party at the expense of more layoffs. "It was really heartfelt to me," he says. "There is a lot of longevity here and a lot of affiliation to the organization. People were looking at that as doing their part to save more jobs."
Working with the BRCH Employee Activities Committee, the hospital decided to go ahead with other holiday celebrations that have long been a tradition there. There was a festive decorating of the lobby to kick off the holidays. The Debbie-Rand Memorial Service League volunteers hosted their annual cookies-and-punch party. Employees held their annual door-decorating contest.
"We do the pieces that culturally send the message to our employees that this is still a great place to work and this is still the hospital you know, but we are going to respect that we need to do the things we need to do to be a smarter business as well," Altschuler says.
BRCH's physicians donated $50,000 to provide grocery gift cards to employees, saving another hospital tradition that would have otherwise been axed. "That doesn't sound like a lot, but our employees in environmental services, food and nutritional and other core functions of the organization really rely on that gift card," Altschuler says.
"Our physicians stepped up to the plate out of their own good will and are picking that piece up. Talk about a hospital culture! We aren't just saying we are a good hospital. We're trying to show everybody it's about all of us coming together and contributing to put us on a healing path."
Altschuler says communicating with employees about the status of the hospital and their job security has been a critical component for building trust. In the midst of the holiday celebrations last week, CEO Jerry Fedele held employee forums in the hospital auditorium to explain the hospital's financial state and its future plans. He took questions from employees in the hope of assuaging their anxieties.
Altschuler says BRCH plans no more job cuts and has made that clear to employees. "We have taken a strong stance that we don't want to be an organization that every six months has layoffs. Talk about morale! How can you as an executive in healthcare allow that to be a threat to your culture," he says. "You have to do things effectively and right so that employees know that, while you had to make a difficult last resort decision, that you've done it right and you've done it with the intention that no there will be no more layoffs."
Altschuler, who's been at BRCH for two years, says the layoffs and the employees' responses have provided lessons in resiliency and organizational pride. "In healthcare it starts with us caring about each other as an organization so we can deliver that excellent care that we pride ourselves on," he says. "I'm not surprised. This is a unique organization."
John Commins is the human resources and community and rural hospitals editor with HealthLeaders Media. He can be reached at jcommins@healthleadersmedia.com.Note: You can sign up to receive HealthLeaders Media HR, a free weekly e-newsletter that provides up-to-date information on effective HR strategies, recruitment and compensation, physician staffing, and ongoing organizational development.
The Seton Medical Center board and the Daughters of Charity Health System board have appointed Lorraine P. Auerbach president and CEO of Seton Medical Center and Seton Coastside. She has been serving as the Interim President and CEO for the past six months. Seton Medical Center and Seton Coastside are members of DCHS, a six-hospital health system spanning the California coast.
Nils J. Gunnersen, vice president and COO for Catholic Health's Mercy Hospital of Buffalo, has been appointed CEO of Bertrand Chaffee Hospital in Springville effective immediately. Gunnersen will remain an employee of Mercy Hospital and will assume his new position under an interim management agreement between the Mercy Hospital and Bertrand.
To fill the positions made vacant by the death of Kent Clapp, the Medical Mutual of Ohio board of directors named interim co-chairmen of the board, a management committee and an interim CEO. Clapp died Dec. 3 in a private plane crash in Puerto Rico while returning to Cleveland after vacationing in the Caribbean. His fiancée, Tracy Turner, and the pilot of the airplane also died in the crash.
As hospitals have lost insurance on their bonds, investors are insisting that hospitals' debt be insured by their performance, says Thomas Royer, MD, president and CEO of Christus Health.
Get ready to add another headache to your long list of gripes about the commercial insurance market: limited-benefit plans.
If you're fed up with high-deductible health plans, these plans will make steam come out of your ears. They've been around for a few years, but their growth is accelerating. And they're now being offered not only by the usual fly-by-night suspects, but also by well-known traditional health insurance plans like Blue Cross and Blue Shield.
Essentially, whatever the purveyors of the plans may say, they lull consumers into thinking they've taken care of their health insurance needs by obtaining such plans, which pay for predictable, preventive care like doctor visits, while leaving catastrophic care for the patient (and ultimately, your hospital) to eat. Health insurers, no doubt, see them as highly lucrative, and no wonder; they can build a critical mass of patients with which to negotiate steep discounts for preventive care with providers, and take on none of the risk and liability associated with catastrophic coverage.
Nice, huh?
Fine if for-profit companies want to sell a program like this to people. We're a nation built on free enterprise (at least we were before the mother of all bailouts this fall). And "buyer beware" should be ingrained in all consumers' psyches. But just don't call it "insurance." Insurance is supposed to protect you from catastrophic unforeseen events like cancer, heart attacks, broken bones, and automobile accidents—not the hangnails.
Would I buy homeowner's insurance that pays for my annual fire extinguisher and termite inspection but which won't pay off if I have an actual fire? Not no, but hell no. And neither would you or anyone else. But make no mistake, plenty of people are going to be attracted to these plans if for no other reason than the fact that they offer some false sense of security for those who can't or won't pay for the exorbitant cost of traditional health insurance.
For some reason, people don't see their healthcare the same way they see other forms of insurance. These things are like my vision plan at work, which is called vision "insurance" but is really just a prepayment plan for me to get contacts at the end of every year. Big deal. If my employer didn't pay part of that premium, I'd drop it without hesitation.
So get ready, hospital CFOs. I want you to print this article and stand in front of a mirror as you read the next two sentences.
Someone's going to get stuck with the bill for people who get in bad accidents or come down with serious illnesses while being "covered" by these cheapo plans. Guess who?
Now you can look up.
Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.Note: You can sign up to receive HealthLeaders Media Finance, a free weekly e-newsletter that reports on the top finance issues facing healthcare leaders.
If there's one thing that healthcare professionals have learned in these trying economic times, it's that the healthcare industry certainly isn't recession-proof. The continuing crisis in the credit markets and the negative turn on Wall Street has slowed the flow of nonprofit hospital capital dramatically. Many hospitals were already working with razor-thin operating margins; without investment income, the pressure increases exponentially.
To make matters worse, with reduced tax revenues, state and federal deficits have and will continue to balloon, and we are already seeing significant efforts to cut hospital payments in New York and California to make up for the shortfall. And to top it off, according to a study out of Pennsylvania, Medicare eligibility and reimbursement rates have led to fewer patients being treated at rehabilitation hospitals and long-term acute care hospitals. This bad news coincides with an American Hospital Association report suggesting fewer Americans are seeking hospital care while more need help paying for care.
As a recent Wall Street Journal health blog put it so aptly, "hospitals traffic in debt. They borrow money for big construction projects, and they effectively lend money to patients when they treat people without requiring payment upfront."
In an all-too-common occurrence these days, many hospitals, which typically depend on the tax-exempt bond market and auction-rate securities to finance their expansions, are suspending non-emergency capital equipment purchases and/or construction plans. Siemens just completed a survey of its customers that revealed that 35% were currently operating under a capital spending freeze. Other facilities are looking at deferment on a case-by-case basis with up to two years of slowed capital purchasing.
Band together
As with other crises, such as 9/11 or Hurricane Katrina, the healthcare community—manufacturers, healthcare providers, and group purchasing organizations alike—need to work together to help minimize the financial strains that our hospitals are facing for the sake of the health of our communities.
In October, I sent a letter to the more than 800 manufacturers with which we work, requesting their assistance in helping our hospitals. In recent days, other GPOs have followed suit. Specifically, we asked them to work collaboratively to hold our contracted prices firm. In cases where an increase was unavoidable, we requested that, when market forces correct, such price increases will be subsequently reduced. Additionally, we have asked manufacturers to provide flexible alternative financing options and pay term flexibility, and requested they support our advocacy efforts in Washington, D.C., to address funding shortfalls for hospitals.
We realize that these financial pressures don't fall solely on hospitals. Healthcare manufacturers and suppliers are also struggling. But whereas manufacturers may ask for a price increase to offset their losses, hospitals will not be able to receive additional funding to cover such an increase; they cannot afford any additional strain on their already difficult financial situations. Manufacturers need to take into account that such increases could literally put some facilities out of business, drastically reducing their income while putting patients at risk.
What hospitals can do
Because sacrificing the quality of patient care is not an option, certain capital expenditures are a necessity. Many hospitals are moving forward with planned capital equipment purchases or construction.
Kettering Health Network in southwestern Ohio recently purchased a 35-acre parcel of land to proceed with the construction of a new facility, and they are in the process of finalizing the construction of an 80,000-square-foot facility that includes physician offices, medical imaging, and a large physical therapy area.
Catholic Healthcare West just purchased 30 acres of land in Sacramento for a medical campus that will include a hospital and additional medical buildings with imaging and laboratory services. Plans call for a new four-story, 148,000-square-foot building, and an expanded emergency room and birth center.
Orlando-based Florida Hospital will open in December a new building that holds space for 440 patient rooms and an emergency department that could span a football field. The tower's purpose is to replace the hospital's existing overcrowded ER and expand its cardiac services. The ability to proceed with capital expenditures during a down economy can be achieved through:
Prioritization and planning: There's always a strategic give-and-take at play, and prioritization and planning are absolutely critical in this environment. Hospitals need to review their planned capital purchases, focusing on return on investment from both a monetary and patient safety standpoint.
Comparisons: It is integral that hospitals do apples-to-apples comparisons of varying offerings and opportunities to ensure they are able to make an informed decision based on cost, quality, capability, service and need. For instance, why buy a 64-slice CT scanner when a 16-slice meets all of your needs?
Deferment of payments: Hospitals should look into the opportunity to defer the start of payments by taking advantage of tax benefits, and then begin payments once the purchase is generating return on investment.
Group buys: By taking part in group buys, major drivers of savings specifically in areas of capital expenditures, hospitals can achieve savings of up to 15% beyond regular contract pricing. Group buys may also include special rates for financing, trade-ins, training, service and extended warranties.
From Wall Street to Main Street, the troubled economy has created extremely challenging times for business industries across America; healthcare is no exception. To minimize the impact of economic struggles, hospitals, manufacturers, and GPOs need to focus on priorities as much in the short-term as in the long-term. As healthcare professionals, we need to guide and assist care providers to ensure they get the best value for the most important investment they have to make—the investment in the health of our communities.
Mike Alkire is president of Premier Purchasing Partners, a division of the Premier healthcare alliance. He may be reached at Mike_Alkire@PremierInc.com .
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The University of Connecticut Health Center is hoping for legislative approval to merge with Hartford Hospital. Advocates of the merger believe that it would eventually end the need for repeated infusions of state funds and would give Connecticut a major academic medical center that could provide an economic boost to the region. UConn's president, Michael J. Hogan, said that the merger hinged on a request for $500 million in state bonds to build a new, larger complex at the Health Center's Farmington campus, and more than $10 million a year in additional state support.
U.S. hospital costs for treating cardiovascular conditions have increased about 40% within the last decade, according to the latest numbers from the Agency for Healthcare Research and Quality. The increase, from $40 billion in 1997 to $57.9 billion in 2006, occurred mainly between 1997 and 2003, according to a report. Since then, the annual growth in hospital costs for treating these conditions has slowed to less than 2% due to a decline in the number of heart disease cases and slower increases in cost per case.
More than half of all employer-based insurance plans in America have lifetime caps limiting how much can be spent on any one employee. But because of rising healthcare costs, more Americans appear to be reaching those caps.
