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Town hall meeting reviews financial status
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Stuart
Smith, vice president for operations and executive director of MUSC
medical center, discussed topics in the 45-minute meeting: review of
fiscal year (FY) 2007-08 organizational goals; employee survey results,
quarterly strengths and opportunities; FY08-09 goals; financial
challenges; cost control/revenue enhancement measures; projects to
achieve standardization; call for ideas for cost savings; and summary.
Service—Serving the public with compassion, respect and excellence
Smith reviewed the medical center’s FY07-08 organizational goals as
part of the MUSC Excellence initiative. Already three years into the
program, MUSC Excellence was adopted to manage the hospital’s service
issues and confirm that all people receive quality patient care. Smith
gave his report based on MUSC Excellence’s five pillars of
communication—service, people, quality, finance and growth.
Under the people pillar, Smith reported that the hospital had met its
goals for reducing turnover, increasing employee and physician
satisfaction. Goals were also achieved under the quality pillar
(mortality index), which is an indicator of how well MUSC cares for
patients. Expected growth in this area was 7 percent.
MUHA depends on its revenue to help balance the hospital’s budget. The
medical center does not receive funds from state appropriations. Smith
explained that MUHA’s FY07-08 budget was set based upon presumed
projected growth by 7 percent, plus the last two years of activity
(both around 7 percent). To prepare for this, MUSC opened a new
hospital in February to handle expected capacity. Hospital leadership
thought it was a reasonable presumption. In reality there was no
patient growth, which contributed to the hospital’s current financial
situation.
Under the finance pillar, the hospital did not achieve the operating
margin goal of 3 percent and ended with -2 percent. Audited financial
statements won’t be released until December and are not expected
to change based on preliminary reports. This reflects a $19-million
loss.
For supplies and labor, goals were set at the 40th percentile under
Action O-I (the benchmark used for academic medical centers). The
current status is the 98th and 87th percentile. Smith is confidant MUHA
will achieve this 40th percentile goal in the near future. On a
positive note, Ambulatory Care continues to post gains reflecting their
focus on caring for a busy outpatient population.
MUSC Excellence’s employee survey results were based on the mid-June
surveys (and prior to the current financial situation) and demonstrate
the best employee participation rate yet (83.6 percent).
Smith then described MUHA’s background behind the current financial
situation starting with a proposal to conduct a study in the late
1990s, commissioned by MUSC’s Board of Trustees, to review the
hospital’s status. The study found that MUSC was facing a shortage in
medical-surgical bed capacity by 100-150 beds. The study recommended
that the University Hospital consider adding more medical-surgical beds
to accommodate expected growth and expansion in the area. Therefore,
the hospital began planning for building phase 1 of MUSC’s replacement
hospital (now Ashley River Tower-ART) to support the Tri-county’s
growing retirement and aging baby boom populations to accommodate
demands in inpatient medical-surgical services.
Leadership also decided to move construction to a new facility versus
adding upgrades to a 50-year-old building. By Feb. 6 and ART’s opening,
there was a rush to open the hospital to support anticipated
admissions. The rush prompted the need to hire experienced (travel)
nurses and other staff. By May, the hospital began to notice the first
major evidence of the economy affecting hospital admissions. In
reality, hospital admissions had flattened eight months earlier in fall
2007. To prepare for this, hospital leadership reviewed the need for
replacement positions, imposed a quasi-freeze on staff hiring, sought
justification, etc.
Another component affecting the hospital’s finances was a change in the
state’s Medicaid reimbursement system, which changed from a traditional
system to a managed-care model beginning Oct. 1. The result
dramatically affected reimbursements in psychiatry and neonatal areas
with cuts as much as 25 percent.
With a budget of 7 percent growth and zero actual growth, adjustments
needed to be made to this volume. Meanwhile, the state legislature
anticipates another 14 percent reduction in appropriations for the
university.
Smith reviewed the financial statements of projected losses (July,
August and September), which equals $8.7 million and means MUHA needs
to make up $8.7 million, plus have a minimal targeted bottom line of as
much as $5 million to 10 million, representing a few days of
operations.
Marilyn Schaffner, Ph.D., R.N., MUHA Clinical Services administrator
and chief nursing officer, reviewed several cost control and revenue
enhancement measures to decrease costs. This includes reducing variance
using a standardization staffing model focusing on nursing unit
staffing, revenue enhancement and examination of premium pay.
It’s been determined that lack of standardization increases costs.
Leadership agreed on metrics, developed an infrastructure for
monitoring variation beginning with nursing unit staffing (based on
California standards) developed a staffing template; daily review of
staffing by administrators and daily review of timelines. Additionally,
administrators looked at other projects and assignments to achieve
standardization (i.e. standardization of unit titles/roles [nurse
manager, operations coordinator and assistant nurse manager educator];
orientation redesign; availability of clinical associates; traveler
reduction; charge nurse; ANSOS scheduling system; sitter policies,
etc.).
Schaffner also reviewed the ShiftSmart program, which allows staff to
register online for available shift work in their area of competency.
Within 24-hours of making their request, participants receive a phone
confirmation. Schaffner reviewed other projected savings initiatives
(by June 30, 2009): labor cost reductions ($25 million); reaching
supply benchmark [40th percentile] ($6.5 million); COM
contributions-anesthesia/primary care support ($1.5 million); and a
travel freeze ($500,000).
Projects identified to help increase funding (revenue enhancement)
include control Medicaid HMO and uninsured; rent payments for MUHA
space; and increase in MUHA’s bed capacity project. The project
involved moving 8West (Hematology-Oncology) to 5West ART; 2Center MUH
Medical/Surgical move to 8West (increased capacity to a 24-bed unit)
balanced out the patient populations at ART and University Hospital.
Other relocations include 7West (MUH Ortho/Trauma) to 10 West; 10East
to 7West; and 9West and 9East will become the new Neurosciences unit.
Finance—Providing the highest value to patients while ensuring financial stability
Currently, MUHA Human Resources and leadership have decided to
forego January employee merit/performance increases to help preserve
jobs. Market equity is planned for January for highly competitive jobs;
no paid time off cash-in; plans to increase extended sick leave from 12
to up to 24 hours; and an increase in the SML bank from 24 up to 40
hours.
Management also unveiled a new survey tool, accessible via the MUHA
intranet, asking MUHA employees to share cost-saving ideas. Categories
identified include labor costs, supply costs, revenue enhancement ideas
and other operational projects. So far, more than 400 responses were
received. A group was assembled to examine and prioritize these ideas.
Administrators were glad to see that many submitted ideas were already
being implemented. They include review clinic schedules for (labor)
review; clinic schedules for average patient arrival times for first
visit; adjust schedules to avoid overtime; (supplies) use of disposable
yellow coats versus blue coats; (revenue) hold patients accountable for
upfront payments; (other) monitor waste going into biohazard bags (stop
trash going into biohazard bags); and turn lights off.
Schaffner admitted that these are tough times for everyone. Thankfully, MUHA continues to make progress and gains.
“On behalf of MUHA administrators, I want to thank employees for their
dedication and support during this period,” she said. “MUHA has
weathered financial difficulty before and the medical center will
emerge as a stronger organization because of it.”
Nov. 7, 2008
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