WMHS Making Process Changes to Reduce Operating Expenses
20 Employees Expected to Take Severance Package
To protect its long-term financial viability, the Western Maryland Health System is making process changes now that will result in sustainable reductions to both its labor and non-labor expenses.
This week, WMHS is implementing process changes in many departments, except for direct nursing care areas, that will result in sustained annual savings of $5.9 million in salaries and benefits for WMHS. As part of these process changes, about 95 full-time equivalent (FTE) positions will be eliminated throughout WMHS, including 54 full and part-time positions that are already vacant.
In anticipation of these process changes, WMHS has tried to minimize the direct impact on employees by keeping vacant positions open over the past several months. The 54 vacant positions eliminated equates to about 40 FTEs. Another 35 positions throughout the Health System will have some reduction in scheduled hours, equating to about 13 FTEs. There will be 44 employees who will be displaced from their current positions. Approximately half of these individuals will have other opportunities within WMHS, and severance benefits will be extended to the estimated 20 employees who will be separated from the organization.
Reducing the cost of providing care is one of the three goals of national healthcare reform. In addition, the Budget Control Act of 2011 requires the federal government to cut Medicare spending by $10.7 billion in 2013, and cuts continue each subsequent year until 2021.
"Identifying process changes that reduce expenses but maintain quality care is important for all hospitals as the federal government begins to rein in healthcare spending” explains Barry Ronan, President and CEO at WMHS. "All hospitals are expecting reductions in their rates of 2 to 3 percent each year over the next 5 years. For WMHS, that means a $30 million to $45 million decrease in payments for our services. Maryland hospitals have also been affected to the state’s payment reform efforts that began several years ago.”
WMHS recently completed a thorough analysis of its daily operations to identify more efficiency while maintaining quality care. Savings of $2.2 million for supplies and contracted services resulted from more standardization of supplies and increased use of group purchasing contracts. These changes were made without any adverse impact on the quality of patient care.
WMHS also used a variety of information management tools to compare its productivity to that of similar hospitals. All departments were part of the analysis, including management. Some departments are already performing at the top quartile and no changes are needed at this time. In other areas, there were opportunities to restructure the workload to improve productivity.
"It is never easy to make the decision to reduce positions,” continues Ronan. "Our goal throughout this process has been to minimize the number of employees impacted.”
"In addition, we recognize our responsibility to the community we serve,” concludes Ronan. "Given the continuing financial challenges ahead, we have to take the necessary steps now to ensure our long-term ability to provide quality health care services to area residents.”
Click HERE for the WMHS State of the System - A Summary of Today's Healthcare Environment from Barry P. Ronan, President & CEO.