County General Hospital to cut patient-care costs 3-year plan seeks to increase facility's ability to compete

April 21, 1996|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Following a national trend toward reducing patient-care costs, Howard County General Hospital is embarking on an ambitious cost-cutting plan of its own -- in spite of its healthy profit margins and at the possible expense of jobs.

During the next three years, the 233-bed, acute-care community facility in west Columbia's Hickory Ridge village -- the county's only hospital -- plans to cut patient costs by 28 percent, President Victor A. Broccolino announced last week.

The plan is part of an effort begun by the hospital last year to reorganize its operations to cut costs.

One aspect of the plan began in June -- joining a nine-hospital regional alliance, the Atlantic Health Alliance, that will allow Howard County General to share such services as pediatric and neonatal care, cardiac care and cancer surgery.

Overall, the motive behind the reorganization is to regain patients who have been steered by insurers to less-expensive providers -- managed care facilities or outpatient centers -- to reduce health care costs. Thus, one of the major thrusts is to expand the hospital's outpatient services.

"We're anticipating where the market will be in three years and we will need to reduce our costs to be competitive," Mr. Broccolino said. "The challenge is considerable."

With the plan, the Howard hospital has joined hundreds of other hospitals across the nation in a struggle to stay viable, said Nancy Fiedler, vice president of the Maryland Hospital Association.

"The nature of health care delivery is changing," Ms. Fiedler said. "And hospitals have to change or risk extinction."

While Howard County General officials say they intend to cut costs by consolidating departments, redefining jobs, attrition and hiring freezes, layoffs are a possibility.

That's bad news for workers who have been under pressure for '' several years.

In 1994, hospital officials announced a plan to increase employee productivity by 20 percent in three years. Employees were to be retrained for other jobs, possibly in new departments.

Union representatives fear some of Howard County General's moves to stay competitive will shut them out entirely.

The United Food and Commercial Workers' Local 27, which represents some hospital workers, wants to make sure the hospital's new outpatient rehabilitation center -- which it is opening with the University of Maryland Medical System in east Columbia's Owen Brown village -- is staffed with union members, said union spokeswoman Loretta Freimiller.

There is some concern from workers during re-organization , Mr. Broccolino said. "Some are feeling a pinch and a squeeze."

Getting the most from its workers is necessary for smaller, community hospitals, said Ms. Fiedler.

Because personnel costs make up 60 percent of an average hospital's budget, getting employees to "work smarter is a crucial component" to cutting costs," she added. "Hospitals must look for ways to train individuals to do additional activities and take advantage of any downtime."

While lowering costs is a worthy goal, hospital profit margins already are seeing some improvement, said Robert Murray, executive director of the Health Services Cost Review Commission, a state agency that controls hospital fees.

And they aren't passing these savings along to patients, he said. That's why the agency will be reducing the annual inflation increase allowed all hospitals for their service rates this year.

On average, the state has allowed rates to increase by at least 7 percent each year because of inflation, Mr. Murray said.

"Profitability in the industry has been quite high," he said. "We're not against hospitals making money, but we do believe patients should share in the savings."

Howard County General's revenue for fiscal 1995 was about $85 million, and the hospital posted a $3.6 million profit, Mr. Murray said. The hospital "is not hurting financially," he added.

Nor are most hospitals in the state, he said.

Anne Arundel Medical Center, a similar-sized hospital with 291 beds, posted a $6.7 million profit during fiscal 1995. Its total revenue was about $122 million, according to data supplied by the hospital.

Mr. Broccolino acknowledges his hospital is doing well -- well enough for it to forge ahead with a $3 million renovation of some of its medical and nursery units.

But, he said, "we cannot rest on our laurels."

Competition from outpatient medical centers, health maintenance organizations and managed care companies is only likely to get tougher. These nonhospitals have the benefit of not staying open 24 hours and have the option to not treat a patient who cannot pay, he said.

"Costs translate into charges," Mr. Broccolino said.

But not if Mr. Murray's agency has anything to do with it. "If hospitals' profits are from lowering costs, that's good. But we don't want them to profit from too high rates," he said.

Pub Date: 4/21/96

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