Hospitals Struggle to Cut Costs, Maintain Care

By Pat Muccigrosso, contributor

February 9, 2011 - Recent headlines in California echo issues that are facing many hospitals and healthcare systems across the United States. Salinas Valley Memorial Hospital in Salinas eliminated 165 positions, offering buyouts to union-represented employees as part of its plan to reduce spending according to the Monterey County Herald.

The Seton Medical Center in Daly City recently opted to close its skilled nursing unit because of ongoing financial strain. Closure was expected to reduce the hospital’s spending by more than $2.5 million according to the San Jose Mercury News.

But not all California healthcare systems are starting with cuts and closures. Faced with the same problem of mounting costs, Chris Van Gorder, president and CEO, Scripps Health, said, "We are committed to preserving jobs and maintaining Scripps as a valuable resource for our patients from this community and beyond. We are doing much more than saving money. We are providing better quality care and becoming an even stronger organization."

Scripps Health, which has been serving San Diego County for 80 years, went through management restructuring aimed at reducing unnecessary variation, improving patient care and preserving jobs across its five hospital campuses and 22 outpatient centers. Departments have been reorganized within a horizontal co-management structure that aims to improve efficiency by standardizing clinical and operational functions.

The approach to gain efficiencies at The Charlotte Hungerford Hospital, in Torrington, Conn., has made it the lowest cost hospital in the state on a per-discharge basis, according to John Capobianco, MS, RN. “We try to observe and watch. We look at ways to make improvements, ways to become more efficient. We use data and look for ways to use technology to aid our staff.”

Capobianco, who is the vice president of patient care services and administration, said Charlotte Hungerford has also taken a hard look at where it invests when it comes to staff. “What I’ve done here is tried to preserve caregivers and look at extraneous expenses. We are putting more of our resources closer to the patient. If you come into Charlotte Hungerford you will see a rather streamlined management and support structure.”

Capobianco added that the goal is to do a better job but also maintain quality of care. Getting there means walking a fine line between understanding and running the business and managing human resources. “You can’t just add people if you see a problem and you certainly just can’t take away people if you need to balance your budget.”

Charlotte Hungerford has been successful at balancing rising costs and falling reimbursements without sacrificing the quality of care patients receive. But headlines across the country indicate that some hospitals aren’t so lucky, cutting costs by cutting services and staff.

David Schildmeier, director of public communications for the Massachusetts Nursing Association, said the cost cutting strategies being used today are the same as : “...misguided and deadly strategies employed in the 1990s and implemented without a shred of research to support their actions.”

Schildmeier added the story is a little different today. “Volumes of scientific research published in every respectable medical journal have shown that these policies that attempt to cut costs by decreasing patients’ access to RNs are deadly and, by the way, not cost effective.”

Decreasing access to RNs, changing nurse-to-patient staffing ratios, is causing big problems for how nurses get their work done according to Barbara Tiller, RN. “We used to get three patients, now we get five. Ramp up the acuity, how sick the patients are, and that ramps up how much work it takes for a nurse. They physically cannot get it done.”

Tiller, a clinical resource nurse at Tufts Medical Center in Boston, explained that fewer resources can result in some tough choices: “It becomes a game of who’s the sickest and who really needs attention before they are in really big trouble.”

Tiller has been a nurse for 25 years, 21 of them at Tufts. During this time, she has seen a general transition in healthcare from a patient-centered model to “a business model, and it’s all about the money.”

At some level, it has to be about the money; hospitals and healthcare are big business. And one of healthcare’s biggest expenses is labor. The most recent figures released by the American Hospital Association in December 2010 show that labor costs account for 52 percent of expenses. So what’s the answer? 

Not cutting nursing positions said Karen Higgins, an ICU nurse at Boston Medical Center. “Studies show that if nurses take care of fewer patients, you have less chance of infection, less chance of skin breakdown and pneumonia and that means the turnaround time of patients getting in and out of the hospital is less and that saves money.”

Higgins, who is co-president of National Nurses United, added, “When you limit how many patients a nurse has, it decreases cost--less complications, less staff turnover in nurses which is a huge cost.”

Higgins also said nurse-patient staffing ratios will be a major issue for the union this year as the newly formed group works to get national legislation similar to California’s staffing law enacted. A recently released study by the University of Pennsylvania revealed that the staffing mandates in California, enacted in 2004, would reduce patient deaths significantly in other states, allowing nurses to spend more time with each patient and keeping experienced nurses on the job.


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