Discussing Vanderbilt Medical Center’s economic position at this week’s Leadership Development Institute were, from left, Joel Lee, Harry Jacobson, M.D., Jeff Balser, M.D., Ph.D., Rick Wagers, Marilyn Dubree, M.S.N., R.N., and Larry Goldberg. (photo by Susan Urmy)
Economy’s ills present risks, opportunities
Vanderbilt Medical Center leaders are exploring numerous ways to respond to what could become the nation's most severe economic crisis since the Great Depression of the 1930s, but currently, staff layoffs are not among the options.
“The people of this Medical Center are our prime asset and the reason for our continued success,” said Harry Jacobson, M.D., vice chancellor for Health Affairs.
“Above all, we need to keep the team together, preserve the team.”
The message was delivered at the VMC Winter Leadership Assembly, in the course of a forthright, substantive panel discussion of the current economy and its impact on VMC. Seated informally on sofas set onstage in Langford Auditorium, executive team members took questions from a moderator and from the audience. The half-day assembly, repeated Tuesday and Wednesday, drew some 700 VMC managers and faculty leaders.
Jacobson and his team called on employees at all levels to work together to restrain unnecessary spending and to delay all discretionary spending until the economic outlook improves. If everyone does his and her part to control costs, Vanderbilt stands to emerge from recession stronger than ever, leaders said.
Four months into the fiscal year, the Medical Center is on track to meet its goal of a $71.1 million operating margin, but given the economy, that outlook could darken.
That's why leaders are calling for intensive cost reduction — as a buffer against potential difficulties, including continued decreases in investment income, an increase in uncompensated care if there should be a rise in regional unemployment and a decrease in patient volumes if people begin putting off elective procedures.
“What we're talking about here is acting before anything hits us, so we can be ahead of the game.
“If we fail to act in advance, if something does happen, we'll be playing catch-up and be forced into doing things we don't want to do,” Jacobson said.
“There are a number of ways to bring costs down without affecting labor or colleagues; we really think that's the most important thing — to preserve the people,” said Larry Goldberg, CEO of Vanderbilt University Hospital.
Instead of staff reductions, hospital and clinic administrators will be looking to reduce supply costs and premium-pay staffing, such as overtime and contract nursing.
Some planned construction starts will be delayed, including Medical Research Building V and the expansion of the Monroe Carell Jr. Children's Hospital at Vanderbilt.
For faculty leaders, difficult economic times present an opportunity for some “intellectual spring cleaning,” said Jeff Balser, M.D., Ph.D., associate vice chancellor for Health Affairs and dean of the School of Medicine.
“We're not in a position where we can't continue to make progress, we just have to be extremely careful about what we do. For us this is an opportunity to make sure our focus on education and research is razor sharp,” Balser said.
In the competition for faculty talent, when discretionary spending resumes, VMC could emerge in a strengthened position relative to many of its competitor institutions, he said.
In his quarterly progress update, Jacobson reported good results on quality and noted some opportunities to improve patient satisfaction. Full details are available on the elevate Web site, www.mc.vanderbilt.edu/elevate.
In the keynote address, business consultant Dan Wolf spoke to the assembly about challenges facing health care organizations as they try to formulate and execute business strategies in a time of continuing alarm about the high cost of health care.