Friday, June 15, 2012

Dealing with harsh realities and continuing to work towards our vision

Our US healthcare industry is beginning to deal with the harsh reality that we must reduce costs. GBMC is not immune to this reality. Our vision contains the commitment to drive waste out of our system and reduce costs, so we should not be surprised when we see a real need to reduce our own expenses.  

While our organization is in a transition period, moving from a fee-for-service world to a fee-for health world, several developments have created an immediate financial challenge for us.  These include the impact of Maryland’s Health Services Cost Review Commission increasing reimbursement rates at a level below inflation, and the decrease in the number of elective inpatient surgeries being done in our region (and nationally).

As we finalized the Fiscal Year 13 budget and worked to remain profitable, we needed to make the difficult decision to “right size” the organization in response to these issues.  Unfortunately, this meant the elimination of 50 positions. While 30 of those positions were vacant, 20 people lost their jobs this week.  Although this is a small percentage (about 1%) of our entire workforce, it is very sad when anyone who is doing a good job loses their job. As the leader of this organization, I know that is my responsibility to do whatever I can to protect the jobs of our people.

At budget time we often are facing the need to reduce expenses. I believe that we must take waste reduction very seriously throughout the year, so that we don’t find ourselves with so many hard decisions at the end of the fiscal year and the need to lay-off people. Unfortunately it’s a fact of life that if we don’t reduce expenses to keep them in line with revenue we put everybody’s job at risk.

We have also reduced expenses in many other areas. Some of these include:

  • We have renegotiated many of our contracts with vendors to ensure lower pricing and improved utilization of services.
  • We have delayed some capital purchases to reduce depreciation and interest expense.
  • We have refinanced a number of our bonds to generate interest expense savings. 

Rest assured, our strategy of Better Heath, Better Care, Less Waste, More Joy is right on.

  • We are getting recognition by decision makers who are excited about us driving measurably better health, measurably better care and measurably lower cost and we need to keep going. 
  • We have private insurance companies who are excited to create insurance products with GBMC as the preferred hospital due to our lower cost and high quality outcomes. Local small business owners are excited about this.   
  • We are expecting a decision very soon on our application with the Centers for Medicare & Medicaid Services (CMS) on the Shared Savings Program which will allow us to grow Greater Baltimore Health Alliance, our network of employed and aligned physicians.
  • Our Patient Centered Medical Home pilot in Hunt Valley is getting rave reviews from patients, and local executives from big companies are coming to visit because they want us to be successful in providing Better Health, Better Care and Lower Cost to their employees.

We are exploring new ways for our employees to share in profits when GBMC does well financially. This model works at some of the country’s best health systems, and serves as an incentive for people to make work redesign happen faster. We hope to announce our new plan later this summer.

Given recent developments, some people may be wondering about the A-word: acquisition.  I can say with confidence that is not something the organization’s Board or senior leadership is considering.  There is no advantage for us to become part of a larger hospital company at this time. Our vision of better health, and better care with lower cost and more joy would be hampered by our need to fill more beds than we have now. We are entering a time when the excess capacity of hospital beds in Baltimore will begin to be squeezed out. Companies that have large numbers of beds will need to close many of them. We are fortunate that we only have 300 beds in a fantastic hospital with the highest patient satisfaction and health outcomes that we have ever had!

In the long run, we’ll be fine. This transition period is full of challenges but we are moving quickly towards our vision. We strongly believe that we are now better positioned to meet our goals as we move forward and that, while painful, the staff changes were necessary in order for GBMC to thrive in the future.

We need to come together around our vision, and drive the waste out. This is what our community, and our country, needs us to do and I am convinced that we will all do well together in doing this work of change!


  1. I rarely get involved in these things for fear of punishment, but given how this has upset people I felt the need to comment on what people are thinking anonymously. Better health, better care, less waste, more joy. I'm not sure if the "More Joy" portion of the vision was strategically placed there because it is least important or by accident, so I'll start by asking "who are your customers?" I was always taught that everyone is a customer or a potential customer, so with that statement that includes patients (your biggest asset) AND the people who work to keep the facility running (your biggest liability and asset). From a nursing viewpoint, it is less joy; not more. Certification bonuses, continuing education funds, tuition reimbursement have been cut and/or reformatted in a way that is not inviting to the nursing staff (the people who interact with your biggest asset-patients- everyday). All of which assist in "Better health, better care and less waste." I understand the thought that the institution has to fix the "care, health and waste" portion to get to the more joy part. However, how are we being cared for in the interim especially when no one feels safe? Reputation is everything to companies and customers (patients, staff members, etc) talk. How will it look to the potential and current customers when the word gets out that no one feels safe? No one feels like they can grow. How will that feeling affect the customer in the bed? Though all the cuts are done, it will be interesting to see what tomorrow brings.

  2. Hello Anonymous,

    Thank you very much for your thoughts. I am concerned about your statement "for fear of punishment". Do you know of people who were punished for stating their opinion? If you do, please let me know or let someone in Human Resources know. We are building a just culture, so we cannot tolerate retribution.

    I am glad that you raised the issue of our reducing some of our expenses for educational costs of our people. I am grateful for all of the hard work of our outstanding nursing staff. I am glad that we could reduce expenses without reducing nurses at the bedside or asking for salary cuts as some of us are taking. During this downturn in our economy until now we are glad to have been able to be among the few businesses that have given annual raises. We thought that these changes were the appropriate ones given all the options we had. I am sorry if we will no longer pay for the course work for these certifications. I can assure you that it is our intention to cover as many benefits as we can going forward. If you have ideas to help us reduce other expenses please work on them with your manager. Thanks for your hard work.

    I get it that removing a benefit is not something that brings joy. As we redesign our health care system, we will have some challenges but my goal is for us all to do well together. Cutting expenses is a tedious task but unfortunately, as you know from your family budget, it is necessary. We are looking into a way for people to share in the savings as we make our system even less wasteful. As I said above, we hope to announce our plan later this summer.


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