Tough Discussions

Last week I held several Team Member forums to discuss the sate of our economy and its ongoing effects on our hospital and market. As many of you are aware, since the beginning of this year, hospital volumes have been trending down nationwide and we are having to make a number of tough decisions in order to react to our ever changing industry. I always consider these forums to be time well spent as I am able to interact with our team, hear what is on their minds, listen to their ideas, and share information on what is happening inside our organization. Particularly given the topic of conversation, I greatly appreciate the interest, candor, and professionalism that has been shown by all of our Team Members as we are implementing decisions to proactively protect our mission to the community. For the past two years that I have been with the hospital, many changes and improvements have been made to better our operating performance and quality metrics and that could not be done without the dedication and talent of our collective team. Despite the challenges that the healthcare industry is facing and has yet to face, I am greatful to work with a team that has a "can do" attitude that never seems to give up! Below is the internal "Progress Note" that I sent out to the team last week to further discuss this issue.


Over the last couple weeks you’ve heard about the tough decisions being made not only at Jewish Hospital and Frazier Rehab Institute but across the Jewish Hospital & St. Mary’s HealthCare system. The decision to eliminate 500 positions throughout our system did not come lightly and is always a last resort as our team members are our organization.

I wanted to take a moment and outline to you our rationale and reason for making the position eliminations. As you all know, over the past year, we have been undergoing a process called the ACE Plan, where we have focused on operations, finance and strategy. This process, designed to make sustainable improvements to achieve and ensure long-term success, has identified now over $70 million in improvements across our organization. Twenty-five million dollars of these improvements have already been implemented. These changes, across Human Resources, Labor, Non-Labor, Quality and Revenue Cycle are many times not easy but they are ones that need to be made to ensure that this organization is stable not only today but in the years to come.

We are weathering a perfect storm in health care. As 2009 ended and 2010 began, we saw an immediate and drastic decline in inpatient and outpatient volumes at our facilities—approximately 3—7%. The good news in this is that this is not just at Jewish Hospital and Frazier Rehab—rather it is an issue being faced all over Louisville and the nation as a whole. This means that while we are facing dropping volumes, we are not losing market share — there is simply less of a market to go around.

There are many speculations as to why the health care market changed. We believe it is a combination of:

• COBRA insurance coverage running out for those first laid off in the beginning of the recession

• High deductible health insurance plans causing consumers to think twice about whether they need a certain test

• Delaying of procedures/office visits due to the economy

All this is coupled with increasing bad debt. In 2009, JHSMH provided $68 million in uncompensated charity care. Compare that number to 2008’s figure of $52 million — a $16 million difference. These figures, while not our fault or of our doing, still have to be accounted for and mean we must change the way we do business.

I’ve had many people ask me what success will look like at the end of the ACE Plan. By making these changes we will:

• Be operationally and financially stable

• Have made strategic decisions for long-term stability and growth

• Be a quality focused organization

• Focus on results vs. activity

• Cross-collaborate vs. staying in silos

• Encourage empowerment over obedience

I appreciate the perseverance that each of you has shown over the last several months. In many ways, we are climbing a mountain. If you have ever gone on a climb, you know there are stretches where you just wonder if you can go on and think maybe you should just bail and turn around and go home. But if you keep pushing through and make it to the top, it’s all worth it in that moment because the view is breathtaking and the sense of accomplishment is empowering.

We’re on a climb. And I ask you to keep pushing ahead with me. The changes and decisions we are making may not be easy but we are heading in the right direction for long-term success—and when we get there very soon, the view from the top will have made it all worthwhile.

Tough Discussions