Hospitals wait for more budget cuts

Medical Center officials await final cost-cutting stages

By Heather Kamins
Daily Staff Reporter

MARGARET MYERS/Daily Diane Morgan, who works for the environmental services department at University Hospitals, pickets with other protesters in response to budget cutbacks.

In the face of fierce competition and a three-year-old financial crisis, the University Medical Center plans to cut $200 million in expenses over the next three years.

"What we did two years ago, knowing how much our cost per patient rates were higher than our competitors, was to undertake the task of cutting $200 million in the following three years," said Medical Center spokesperson Mike Harrison. "During the first year we wanted to cut $60 million, and then $70 million each of the following years."

Currently, the University is beginning its third fiscal year under the cost-cutting system. Administrators must now decide where the final $70 million can be reduced.

"Our goal is to cut the final $70 million in the next year," Harrison said. "In the third year we were originally thinking that we would have to take bigger steps to cut money."

Options on the drawing board included joining with other organizations or privatizing the hospitals.

"To say that we can do that in the next year is pretty difficult," Harrison said.

"We are currently looking at other ways to reduce the $70 million. We just don't know how to now. We are still pretty early in the fiscal year," he continued.

The Redesign Coordinating Group, a committee of hospital employees and administrators, is charged with looking across the medical center to find ways of reducing costs.

Harrison said the medical center will probably know its plan of attack within the next few months.

Interim Executive Director of University Hospitals Larry Warren said the cost efficiency program is just a way of doing better business.

"The cost-effectiveness program is intended to position us to try to make revenue," Warren said. "Our costs were too high and employers were telling us day in and day out that unless we reduce our costs, patients will go elsewhere."

During the first two years of budget cutbacks, the University eliminated 1,076 full-time equivalent employee positions at the medical center.

"But because we tried to be prudent of those 1,076 FTEs only 581 University employees were affected," Harrison said. "Three hundred and sixty-nine of the FTEs found other jobs, most within the University."

Of the 581 University employees who lost their jobs, only 221 were unplaced.

"I think helping to get that 1,076 down to 212 is pretty significant," Harrison said.

Besides eliminating jobs, the University also looked at reducing the length of patient stay, the number of beds and standardizing the use of supplies and services.

"Every time we can reduce the number of nights a patient has to stay in the hospital, we are going to save money," Harrison said.

During the first year of the $60 million budget cuts, $11 million came from reducing the length of patients' stay in the hospital. The number of beds in service were also reduced from 847 to 793.

Harrison attributes the hospitals' high costs to support of the academic mission and the fact that the medical center often specializes in treating patients afflicted with extreme conditions.

"We are a tertiary medical center, which means that we have costs that are not associated with smaller hospitals," Harrison said. "In general we see sicker patients. We see specialized patients, which can be a lot more expensive.

"A lot of the cases we get are a lot more expensive," Harrison said. "We are proud of the services we are able to provide, but it comes at a cost - literally and figuratively."

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