The Union Hospital Board of Trustees has selected a veteran healthcare executive to become the hospital's next president and CEO. R. Bruce James will begin his duties at Union Hospital on July 6. He will replace William W. Harding who is retiring after 26 years in the position and 29 years of employment at UH.
Kevin Sowers, who began his career at Duke University Hospital 24 years ago as an oncology nurse, has been named the hospital's CEO. Sowers has served as Duke University Health System's COO for the past six years, and as interim CEO for the past year.
Thomas R. Frieden, MD, last week became the 16th director of the Centers for Disease Control and Prevention and administrator for the Agency for Toxic Substances and Disease Registry. He was named director of CDC by the White House and the Department of Health and Human Services on May 15. Frieden, 48, has been the director of the New York City Health Department since 2002. He replaces Richard Besser, MD, who has been the acting CDC director and acting ATSDR administrator since mid January.
PricewaterhouseCoopers LLP has named Kelly Barnes the leader of the firm's US Health Industries Practice, with responsibility for overseeing services across all health-related industries served by the firm in the public, private, and academic sectors.
Nemours appointed new members to its Florida Board of Managers that serves as the governing body for Nemours healthcare facilities in Florida and, in the future, Nemours Children's Hospital in Orlando. New members include former Florida Lt. Gov. Toni Jennings, David Dizney, president and CEO of United Medical Corp., Craig M. McAllaster, dean and professor of management at the Roy E. Crummer Graduate School of Business, and Robert K. Wilson, Jr., MD, clerkship co-director in pediatrics, clinical professor at the Florida State University College of Medicine Pensacola Regional Campus. Nemours also announced the appointment of Bill Winder to a newly created position of senior administrator, Nemours Florida. In his new role, Winder will collaborate with a team of professionals in leading the development and integration of the Nemours Florida system of care.
Can you pull out an additional million or two from your revenue cycle? After 25 years in the business Karen Bowden, president of consulting for ClaimTrust, knows all the places to look. In this interview she shares some of her revenue cycle tips, such as how to focus on high-value claims.
Look through the classified ads in your local newspaper, on eBay, or Craig's List, and you'll find someone selling a Bowflex or a treadmill that's "still in the box." There's usually a brief note tagged on saying something like: "I bought this last year and never had time to use it."
This "still in the box" mentality in our consumer culture holds that if you simply purchase a tread mill, a weight set, a stationary bicycle, or a gym membership, you will get the results you want, regardless of whether you actually use it.
It sounds irrational, and it is. But it's also true. If you're a regular at a gym, you know the New Year's resolution crowd thins out by March, but most of them are probably still paying their monthly dues. How many dieters begin with ironclad determination to gain six-pack abs, only to lose heart after a few weeks? These are good people who start out with sincere intentions—they want to eat healthier food, they want to lose weight, they want to exercise—but things happen, life gets in the way, and they drop out, feeling discouraged.
Still in the box is a defeatist attitude that good wellness programs can help overcome by getting people to recognize that good health can't be purchased, but it can be gained with lifestyle modification. Wellness coaches talk about setting attainable goals for employees, like moderate diet adjustments, and moderate exercise, and backing up those goals with incentives like reduced health insurance premiums, or recognition from fellow workers, which pique interest and encourage slow, healthy change. It'd be great to run a marathon, but let's start with a half-mile walk and build from there. It'd be great to lose 40 pounds, but let's begin with some minor diet modifications and see what happens.
Slow, steady healthy behaviors—measured by attainable goals, encouraged by positive feedback and cost-effective incentives, are exactly what Americans needs to adopt.
Hospital employees who've successfully undergone wellness training can provide an excellent example to their families, friends, and neighbors in their communities. Think about it. Hospitals are among the largest employers in most communities, where hospital employees are held in high regard. Slimmed-down, tobacco-free, and healthy feeling hospital workers could fan out into their communities and spread—by example—the gospel of wellness to family, friends, and neighbors. The positive repercussions could be enormous.
Nobody wants poor health. Last week, a new poll found that Americans want whatever healthcare reforms emerge in the coming months to invest in disease prevention more than for treatment. The poll of 1,014 registered voters, conducted by Trust for America's Health and the Robert Wood Johnson Foundation, found that 70% of Americans gave investing in prevention between an eight and 10 on a scale of zero to 10, where 10 means very important.
"This poll shows the American public strongly believes it's time we shift from a sick care system to a true healthcare system that stresses disease prevention," says Jeff Levi, executive director of the nonprofit TFAH.
That may be true, but will that be enough to promote change? Americans talk up the idea of disease prevention but they don't practice what they preach. The CDC reports that 27% of Americans are obese, and that trend isn't slowing.
Partners for Prevention estimates that more than 117,000 lives could be saved each year if Americans would follow simple prevention steps such as cancer screenings, quitting smoking, or even taking one aspirin daily to prevent heart disease.
Developing healthy habits means slowly changing behaviors that have been learned over decades. That's a lesson that tens of thousands of America's hospital employees have already learned in their wellness programs. Now it's time for them to share their knowledge with their communities.
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.
Long viewed as one of the few safe sectors, healthcare is now feeling the pain of the financial crisis. Although hospitals generally are required to keep more cash on hand than other businesses, they are also suffering from an inability to access capital and remain solvent. The economic downturn has forced hospital and health system executives to make painful staffing cuts in recent months, and expectations are that things will get worse before they get better.
Understandably, many senior leaders are inclined to act aggressively to stop the bloodletting, but they must recognize that today's difficult decisions will have implications far beyond the immediate financial crisis. In order for organizations to emerge with their relationships and brands intact, they will need to be thoughtful and creative in the way they approach cost-cutting now and in the months ahead.
The research
According to research conducted in the fourth quarter of 2008 by the Institute of Healthcare Executives and Suppliers, 71% of hospital and hospital system CEOs surveyed have cut their 2009 capital budgets. Forty-seven percent cut budgets by 20% or greater. Nearly 10% indicated that they were "delaying major capital projects, i.e. construction projects, until later in 2009" or have "frozen all capital expenditures for first and second quarters to only critical items." Still another 11.5% haven't cut yet, but say they are "very likely to cut if current economic trends continue."
In terms of patient volumes for hospitals/systems, the numbers are misleading: 73% have seen a drop, but on average slippage is at a modest 2.1%. The problem with this number is that it is widely considered to be a reflection of a reduction of good-payer patients –people with insurance who will forego seeing a doctor for minor conditions in a downturn. Conversely, many organizations see an increase in emergency room—and other bad debt—patients in downturns. IHES survey respondents reinforced this conclusion, observing that "bad debt and charity care is increasing sharply."
Although the drop in patient volumes appears on the surface to be modest, the bad debt and charity care instances offset the number of good payer patients, creating falsely conservative patient volume data and a far greater expense ratio for hospitals. In other words, a bad payer mix that increases cost of care, lowers reimbursement and requires staff to work harder and thinner.
According to findings from Longbow Research, the numbers are actually worse. Hospital inpatient admissions are declining even more sharply than experts anticipated—more than 49% of hospitals reported declines in inpatient admissions in the fourth quarter, compared to almost 48% reporting increases in the third quarter. CEOs explained to IHES that they are addressing these financial concerns through hiring freezes, staff reductions, and not filling their open positions. Nearly one-third (32%) reported having reduced staff. However, almost 10% of respondents claim to be "establishing lean process improvement and strict budget adherence by managers."
The solution
So the question is not if, but how deeply, hospitals will have to cut this year, and just how much can be accomplished through process improvement, better fiscal responsibility and more progressive staff management?
Labor costs account for more than 60% of total healthcare expenses, so it is the most obvious place to focus your efforts. Unfortunately, it's also one of the most challenging areas to tackle. Many healthcare systems aren't equipped to efficiently manage expenses and productivity. Ironically, this can result in increasing labor expenses in the face of staff reductions and other efforts to save money.
In fact, labor expenses often add up unexpectedly, with overtime, extra shift bonuses, on-call and call-in bonuses, and other expenses necessary for safely staffing healthcare facilities. These are typically bundled into the pay system and go untracked and unevaluated. However, there are many ways to identify and address additional labor costs. It is critical to know how much your actual labor spending is and where it is coming from. Once you begin tracking these expenses, you can begin to benchmark—and then improve—efficiencies.
Following are several steps for gaining control of your organization's labor costs, while preserving as many jobs as possible. Once you have reviewed this list, talk to the key leaders in your organization. You need their buy-in to effectively evaluate and improve the use of resources.
Review payroll: Call payroll and review the average income of staff to find the outliers (people who are making significantly more than the norm because they are being paid overtime). Look at your current bonus programs and ask yourself if you still need them; is the design meeting your current needs? Most bonus programs are typically built around shortages when hospitals are desperate. In all likelihood your organization is no longer in this situation. Re-evaluate bonus triggers, you may even find you don't need them at all.
Track expenses: Create the right systems to track expenses. Every payroll system is a bit different, but here's an idea that may work for you. When employees receive on-call bonuses, the pay should be coded differently from other bonuses or even standard overtime pay. By tracking these pay codes, you may find that you actually save money by scheduling one additional person to work versus putting two people on call. Because many healthcare workers dislike being on call, scheduling an additional person can solve two issues—it reduces bonus expenses and improves employee morale.
Staff proactively: Review your total talent management needs and determine the best way to staff strategically. Then schedule and staff accordingly. Create your own flexible internal workforce by building support around your core regular staff to handle demand as volumes increase and turnover occurs. This is much more cost effective because you are not pushing core staff into overtime.
Asses your internal pool: To quickly assess whether an internal pool is working, organizations can start by looking at agency utilization. Internal pools should be staffed to support high-usage areas rather than to fill in for routine, easy-to-fill shifts that regular staff can work. Another quick assessment relates to the requirements of the internal pool staff. When the program was designed, did it include specific criteria and minimum expectations that staff should work in exchange for the higher pay rate? These commitments typically relate to the number of shifts, hours, and weekend responsibilities.
Are those commitments and requirements being audited to ensure the organization is getting its ROI? Most healthcare systems don't have automated tracking systems in place to track staff commitments to the actual worked hours. Consider working with a partner who can purchase the technology on your behalf to ensure you are getting the most from your internal pool and saving money.
Review overtime policies: Appropriate rationale and levels of approval for overtime use should be in place. Consider two different standards for overtime usage based on clinical and non-clinical (non revenue-producing) areas. There are times when it makes sense to approve overtime in a clinical area to keep beds open and generate more revenue. Build a pre-approval process so that overtime is being approved before it is worked—and consistently follow that process so staff understands the expectations for receiving approval.
Shift fixed to variable expenses: When you are hiring your own staff your expenses don't go down just because your recruiting needs do. By switching to an outsourced talent management organization, your recruiting expenses become variable based on how many people you hire. BUT make sure you find the right partner who will reflect the variable charge approach and charge you primarily by requisition. You also want to work with someone who offers consulting services that include an assessment of your organization and a plan based on specific recommendations.
Proceed with caution: With the economy being what it is, you probably won't balance the budget without making some staff cuts, but don't overdo it. Many organizations are taking a slash-and-burn approach, at their own peril. Remember these decisions must not be taken lightly. The demand for nurses will bounce back and sooner than you probably think. So have systems in place to provide great customer service to candidates that you may not need today, but will have to rely on in the future. How you treat a healthcare worker during a hiring downturn will leave a lasting impact on them for the future.
These are uncertain times, and historic metrics don't necessarily apply, but implementing the techniques above as part of a disciplined approach to managing labor costs helped one Midwestern healthcare system achieve savings of $14 million over an 18-month period.
Imagine what that could mean for your organization's ability to ride out the downturn and emerge ready for growth in the recovery.
Jill Schwieters is the executive vice president of Pinstripe, Inc., and the founder of Pinstripe Healthcare. Dave Harper is a healthcare financial consultant and member of the Pinstripe Healthcare advisory board. They can be reached at 262.754.5359 or info@pinstripetalent.com.For information on how you can contribute to HealthLeaders Media online, please read our Editorial Guidelines.
Is healthcare in its first wave of labor cost containment, or has it come to full blown cuts of what used to be the untouchables: salaries and jobs? A recent Hewitt Associates survey of HR execs at 518 large U.S. employers suggests that while healthcare organizations are making some tough cost containment decisions, they are still in the first phase of softer cuts compared to other industries. For example, of the 42 hospital/healthcare organizations that responded to the survey, 83% said they were increasing travel restrictions compared to the 72% overall response.
Also, nearly a quarter of healthcare organizations are changing their PTO policy vs. only 9% of the entire group. The overall group has probably already made this change as a first-wave response, says Lori Wisper, senior consultant of the broad-based compensation consulting practice at Hewitt in Lincolnshire, IL.
The survey also found that healthcare organizations are implementing drastic cost containment measures such as layoffs and salary freezes at much lower percentages than their colleagues in other industries. In fact, 33% had undertaken layoffs vs. 63% of the total respondents. When it came to freezing salaries or wages, again healthcare was lower than the overall respondents at 38% vs. 58%, respectively.
"If you look at the numbers in healthcare vs. the overall survey, there is a bit of a lag" in the more severe types of cuts, says Wisper, who believes this may be due to the fact that healthcare hasn't felt the recession as strongly as other industries.
At the same time, Wisper says there may be other reasons for the lag. "Healthcare organizations might be struggling financially, but there are labor market issues they have had to deal with in terms of shortages that you don't see as much in other industries," says Wisper. "They've had to deal with the shortage of nurses for many years, so even if they were in cost cutting mode, they might not cut pay because it would make that shortage worse."
The survey found that 12% of healthcare organizations and 16% overall had reduced salaries or wages, a move that is considered severe in the labor world. While both numbers seem relatively low, Wisper says when the same survey was conducted during a downturn in 2001, only single digits had taken these actions. "When we consulted with clients in the past and they would ask ‘what should we do?' the very last thing anyone did was cut. You might hold things steady and say no increases or very small increases, but cutting was the big taboo and that has certainly been broken this year. Companies have had to survive."
Wisper, for her part, believes there may be more cost cutting on the table for healthcare with 38% of healthcare organizations, for example, still considering salary freezes. Indeed, healthcare may be catching up to other industries with layoffs. My colleague John Commins reported that after a two-month lull, three hospitals and health systems recently announced layoffs.
Of course, when it comes to labor costs, there is the challenge of cutting while preserving employee morale and more importantly holding on to top talent. To that end, if you look to the survey for answers, healthcare companies are offering flexible work arrangements. Healthcare is doing it far more than the overall survey number suggests at 31% vs. 14%, says Wisper. "I see this as a more progressive approach as an employer. You are using non-cash related things to make employees feel valued by giving them more flexibility or allowing them to telecommute if that is feasible. It helps you retain them in times when you are actually containing costs or cutting them."
I haven't talked to anyone who is particularly optimistic that the economy is going to turn itself around in the next six months, but if it does, healthcare might stave off additional suffering. "If the economy holds enough industries up healthcare might not actually hit the bottom spot that many other industries have hit," says Wisper.
Even if the economy starts to improve and hospitals, for example, start to see an uptick in elective procedures, which benefits do you restore first? It may take months or years before healthcare organizations can ramp back up to the point of offering the kind of benefits and salary structures they did in the past such as 401(k) employer match, year-end bonuses, and regular salary bumps.
Note: You can sign up to receiveHealthLeaders Media Finance, a free weekly e-newsletter that reports on the top finance issues facing healthcare leaders.
In talking to the nation about reforming the healthcare system on Saturday, President Barack Obama cited several more areas where costs could be cut—which is likely to draw unpleasant responses from healthcare providers.
These saving proposals, according to the president, will contribute an additional $313 billion over the next decade to pay for healthcare reform efforts—bringing the total offsets put forward by the administration to nearly $950 billion over 10 years. This would extend the solvency of Medicare’s Hospital Insurance Trust Fund by seven years to about 2024, the administration said, plus reduce beneficiary premiums for physician and outpatient services by $43 billion during the 10 years.
In comments Friday, American Hospital Association President and CEO Rich Umbdenstock, sharply criticized any payment cuts, saying paycuts were not reform. "This week we asked Disproportionate Share Hospitals to push back on proposed cuts. Expect a steady stream of similar calls for action in the weeks ahead."
The savings, as proposed by the administration, would come from these areas:
Incorporating productivity adjustments into Medicare payment updates (estimated savings $110 million over 10 years). Since most Medicare payments "have not been systematically adjusted to reflect" systemwide improvements, the administration has proposed permanently adjusting most annual Medicare payment updates by half of the economy wide productivity factor estimated by the Bureau of Labor Statistics.
Reducing subsidies to hospitals for treating the uninsured as coverage increases (estimate savings $106 million over 10 years). Instead of paying hospitals to treat patients without health insurance, the administration suggests that people will have insurance coverage now--making these subsidies obsolete.
Paying less for Medicare Part D drugs (estimated savings of $22 million). Drug reimbursement could be reduced for beneficiaries dually eligible for Medicare and Medicaid.
Also, additional savings would come from adjusting payment rates for physician imaging services to better reflect actual usage and adopting a Medicare Payment Advisory Commission recommendation for 2010 payments to skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals.
