Budget squeeze under way at Johns Hopkins Hospital About 300 jobs will be pared through 'managed attrition'

February 08, 1997|By M. William Salganik | M. William Salganik,SUN STAFF

Department heads at Johns Hopkins Hospital have been told to prepare reduced budgets for their departments, as the hospital looks to cut spending by about 8 percent in the fiscal year that begins July 1.

The usual budget-planning cycle has been given more urgency this year, Ronald R. Peterson, president of the hospital, said yesterday. "What's different this time is we're expecting more downward pressure on the revenue stream," as Maryland forces its Medicaid patients to shift into managed care, and the Medicare program looks more to managed care as well.

Also, he said, the hospital needs to be cost-competitive with suburban community hospitals, which have lower charges because they do not have teaching expenses or deliver as much care to uninsured patients.

Peterson said he expects to reduce the hospital's 6,000-person work force by about 300 over the next year through "managed attrition." With a normal turnover of about 100 workers a month, he said, Hopkins could fill all patient-care positions and some others, and still achieve a 5 percent reduction without layoffs. He said department heads have been asked to prepare cost-reduction plans.

"In clinical areas, we want to see what it would take to reduce costs 10 percent," Peterson said, "in nonclinical areas, 15 percent."

Actual cuts will vary, he said, depending on specific needs and on how well departments have done in the past in cost management.

While to some extent Hopkins will need fewer employees if it has fewer patients, Peterson said a "re-engineering" effort -- similar to that most hospitals have gone through in the past few years -- is under way to identify other possible efficiencies.

Dr. Judy Reitz, senior vice president for operations at the hospital, said the re-engineering effort has been in the planning stages for more than two years and will take three years to implement fully. She said it placed an emphasis on "flexible staffing" and "multi-skilling," so staff can be increased or decreased or moved within the hospital to accommodate peaks and valleys in demand.

Also, she said, there was an effort to "work smarter." For example, she said, "We had nurses going off their units to obtain medications from the pharmacy." The hospital is installing a pneumatic tube system by the end of the year and in the interim is having drugs carried by aides rather than by nurses.

Overall, the hospital is looking for $45 million in savings from its $600 million budget. That will be the bulk of $55 million targeted for trimming from the entire $1.5 billion Johns Hopkins Medicine budget.

Johns Hopkins Medicine includes the medical school, the Johns Hopkins Bayview Medical Center and clinical services delivered away from the hospital campuses.

Hopkins Hospital will bear most of the cuts, Peterson said, because of the need to improve its "competitive price position" and "because it is within Hopkins Hospital that we see the most significant future change in revenue stream."

All hospitals have seen patient censuses drop with the growth of health maintenance organizations and other managed-care plans. The dollar-conscious insurers have pushed to have more people treated as outpatients and for shorter hospital stays for -- those who are admitted.

Hopkins' budget for the current fiscal year was based on 42,000 patient admissions, but the pace is running about 7 percent below that, said Elaine Freeman, a spokeswoman.

This will be exacerbated, Peterson projected, as Medicaid patients -- who represent 20 percent of the hospital's business -- switch to managed care, which Hopkins expects will mean a drop of 20 percent to 25 percent in hospital use for that population.

He said Hopkins is working to persuade state health officials to adjust its Medicaid payment rates to take into account the additional costs at teaching hospitals.

Pub Date: 2/08/97

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