March 10, 2000

Final round of staff reductions implemented

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Nuclear Medicine Technologist Chris Smith administers a bone-density screen to patient Judy Bloeser. (photo by Dana Johnson)

Final round of staff reductions implemented

In the continuing effort to bolster the institution's financial position, Vanderbilt University Medical Center officials this week announced the elimination of several jobs, resulting in the lay-off of 30 employees.

Numerous vacant positions were also eliminated.

This is the second and, officials say, final round of job cuts associated with the medical center's ongoing cost-reduction program aimed at offsetting deep and mounting losses associated with the state's TennCare program. The initial round of layoffs took place in January.

All of the cuts were carefully evaluated to ensure that patient care would not be compromised in any way, officials said.

"Cutting positions is an extremely difficult and painful process," said Dr. Harry R. Jacobson, vice chancellor for Health Affairs. "But the simple fact is that without them we cannot remain competitive. I am confident, though, that we are taking the needed actions to ensure the future of the institution."

Nationwide, academic medical centers are being forced to make tough decisions about how to address the challenges posed by today's rapidly evolving health care market. Painful though it was, the reductions-in-force at VUMC pale in comparison with measures recently taken at the University of Pennsylvania — there, 2,000 people were laid off.

With cost reduction and revenue enhancement initiatives for the upcoming fiscal year well under way, further staff reductions are not anticipated, said Mark Penkhus, chief executive officer of Vanderbilt University Hospital.

Staff affected by the lay-offs were given 45 days notice, are eligible for immediate re-employment and can work closely with a re-employment counselor to find new opportunities. Officials expect that many, if not all, of the staff impacted will find alternative employment in other areas of the medical center.

Last October it was announced that intensive planning was under way for financial improvement across the medical center. Hospital and clinic expenses this fiscal year were budgeted at $483 million and net revenue was budgeted at $497 million. To get the financials back on track, the Clinical Enterprise Group (CEG) determined that by the end of March Vanderbilt needed to identify and begin implementing financial improvements totaling $52 million per year.

Approximately $20 million will come from increased revenue and $32 million will come from expense reduction.

The two rounds of layoffs are directly related to cuts in federal Medicare reimbursement and to the losses VUMC suffers for providing services under the state's TennCare program — losses which are expected to top $20 million this year. VUMC has experienced losses due to TennCare of more than $15 million each year for the past four years.

TennCare is the state's five-year-old program that replaced Medicaid. It provides health coverage for 1.3 million Tennesseans and it is drastically under-funded. According to some estimates, the state's program is under-funded by more than $230 million.

It is, in short, one of the most significant causes of the cost-reduction efforts VUMC is now involved in.

To address the situation, the institution is pushing for an aggressive package of legislative reforms, including the creation of a disproportionate share pool and permanent support for medical education.

"If we are successful in our efforts, it can mean an additional $20 million to the medical center," Jacobson said recently in his annual State of the Medical Center Address. "If we're not successful, we will need to carefully evaluate our continued participation in TennCare."

Further initiatives are under way to address a wide variety of cost-related issues, including reducing waste and redundancy, lowering our average cost-per-case and cost-per-discharge figures, improving billing and collections, increasing reimbursement from managed care organizations and managing our TennCare and charity care.