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    Misc

    Hospitals and the recession

    March 6th, 2009

    by Tony Chen

    Here's a few things I've been hearing from other hospitals on the impact of this recession.

    "Bad debt is going through the roof."

    "Even administrative employees are being asked to take unpaid time off, go on furloughs."

    "Merit increases are frozen. So are open positions."

    "Surprisingly, volumes are up 5 to 8 percent from last year. It's just that we're not getting paid for the services we provided."

    "We are actually having one of the strongest years in the hospital's history."

    "We're actually doing okay, though we are reconsidering a major capital project."

    One thing to recognize is that while we like to look at national numbers, our hospital systems all operate in local environments. Yes, all of our investment incomes were smashed, but each market (some folks say it's probably 250 to 300 local markets around the country) will have unique dynamics to deal with.

    [More:]

    This morning, hospital CEO blogger Paul Levy wrote an open letter to his employees about the $20M hole they face--layoffs, furloughs, pay reductions, eliminating pay raises are all on the table. Paul continues to push the envelope with transparency, which I believe will help his team find the best solutions. He updated his post to say that he's received over 200 ideas from employees on what other expenses could be cut out.

    "Now, sadly, we have to crank up the expense reduction," Levy said. "We began the year with a level of staffing that assumed a larger number of patients.

    "Part of the solution to this problem will be to lay off people. I'm not sure how many yet, and I am hoping you can help me figure out how to minimize the number by using more creative and less disruptive ways to solve the problem."

    If any organization can pull through something like this, it is Paul's, as they have created such an open, collaborative environment--for all the negative things to come, this may actually pull people even closer together. Keep up the good work, Paul--we're all in the same boat here.

    Out of all the ideas I've heard for cost-cutting, the idea that I hear the most is employing a systematic process improvement methodology, such as lean management and/or six sigma. In this environment, lean management techniques, in particular, can yield results quickly (with six sigma, it takes time to get trained. And even if you are trained, it takes weeks/months to find the right metrics and measure them meaningfully).

    If you're new to the lean concept, go check out what Virginia Mason and ThedaCare (PDF) are doing.

    Comments:

    Comment from: Lavinia Weissman [Visitor] · http://www.laviniaweissman.com
    I don't believe we will shift out of the recession until we alter our thinking.

    And in response to this entry:

    It's interesting that you are posting this today. Nick and I by phone talked about it at length or maybe in email. I can't remember.

    What is core to anything new right now is not OD methodology or financial interventions. Just the word health care reform alone implies fixing rather than innovation.

    All that said, I think it is becoming time for health care decision makers to learn about 'trust' and what is implied by the word trust when it is time to tackle a new chaotic hiccup you did not expect or realize you were creating.

    The Beth Israel/Deaconess dug this hole. Paul spoke about the lack of volume. If you have lived in Boston you would know the volume is unchanged and community hospitals and smaller Boston Area hospitals like Newton Wellesley and Faulkner (now associated with Brigham and Womens) have extended a web into communities by building trust with patients, clinicians and other
    stakeholders.

    To date I have not see anyone address the need for developing a home based form of medicine that is community driven for chronic illness and I have not seen anyone address the overpopulation of hospitals near to teach institutions and the lack of formulation of resources to link to rural hospitals that cannot fund a lot of specialty care. Mayo has experimented a bit with this through their foundation.

    All that said, I think it is time for Hospital Impact to change its name to health impact.

    Until we address both issues of trust and all the resources that are put into promoting systems of care that are out of date, we will see no innovation that insures affordable health care.

    That said, we are closer in reality to a WorkEcology Congress to look at some of these issues from the consumer centric view, if I can get the successful men in my life to stop thinking like Wall Street about raising money and building schemes that are about buying things and focusing on merger acquisitions.

    That said, it is a great time to create change and as I said in this original post in Hospital Impact the time I got to write an article as the non CEO in the crowd there is a study that shows that most innovation does not require investment. It is ultimately about learning and reallocating existing resources.

    Here is the link to that post and at some point I look forward to authoring something new here.

    http://www.hospitalimpact.org/index.php/leadership/2007/01/16/healer_heal_thy_self_taking_time_out

    Tony if you feel like going in and making a hyperlink, please do. I am rusty at HTML again because I am focused on other things.

    I am hoping some day you add a preview screen to look at comments so I can edit.
    Permalink 03/09/09 @ 21:43
    Comment from: hospitaltony [Member]
    Lavinia, thanks as always for your value-added thoughtful comments.

    You are definitely correct that lean and six sigma is really just optimizing the current system without tackling any of the problems inherent in the system.

    I am working on a post that addresses this "innovation" piece - re-imagining the system, if you will.
    Permalink 03/10/09 @ 10:13
    Comment from: Lavinia Weissman [Visitor] · http://www.laviniaweissman.com
    Tony, good show. I have just completed an op-ed and giving the NYTIMES a chance to respond first and agree to publish. If not I am going to flood it out in network. I am sending it to you, so you can think about innovation. I am happy to give you a private copy for now to add to your thinking and maybe you can join me and Nick in a 3 way call sometime, because what we are thinking and talking about is a lot of fun. But we should catch up sometime by phone as well. Skype me or email me if you want to do that.

    I also recommend you read my article from 2007. Yikes have we known each other now 3 or 4 years.
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    Safety Tip

    Hospital facilities built today do not include asbestos, but many older buildings still have asbestos components in them. Steam pipes, boilers and furnace ducts were often insulated with an asbestos blanket or asbestos paper tape because of their fireproof and insulating properties. Resilient floor tiles were made from vinyl asbestos. Asbestos cement was employed in roofing, shingles and siding materials. The hazard of this carcinogen increases when the fibers become airborne, and untrained contractors can inadvertently increase risks by cutting, tearing, sawing, scraping, or sanding asbestos materials. Elevated asbestos levels can occur in hospitals where old materials are damaged or disturbed. It is best to leave undamaged asbestos material alone if it is not likely to be disturbed. Inhaling asbestos fibers is known to cause mesothelioma and other diseases. Be sure to use an experienced asbestos removal contractor when you need to get rid of old materials that might contain asbestos.