Health Center Officials Strive
To Cut Costs, Maintain Quality
January 24, 2000
Six months into the effort to right the Health Center's finances, more than $20 million worth of annualized savings have been identified.
The figure is impressive, although it's only a working estimate of the yearly total savings. Impediments such as contracts and legal issues will prevent the Health Center from realizing the full amount this fiscal year.
Nevertheless, there's some progress being made in addressing the Health Center's deficit, most recently estimated at $21 million for the fiscal year ending June 30, 2000.
On Jan. 26, President Philip E. Austin and Peter J. Deckers, dean of the School of Medicine, will present testimony on the Health Center's budget before the General Assembly's Education Committee, in a hearing scheduled for 1 p.m. in Room 2E of the Legislative Office Building.
The savings identified to date result from senior management officials at the Health Center working with consultants - including those from Tranxition Management - to correct the institution's finances.
"We're making phenomenal progress," says Deckers. "We have made some changes and some tough decisions, but the process is moving ahead. There is no one single thing we can do that will magically remedy our finances. It requires hard work and a combination of initiatives."
The combination of initiatives, says Deckers, include taking costs out of the system, improving efficiencies and enhancing various revenue sources. Officials have already acted on each of the initiatives.
Removing costs from the system, for example, could be something as easy as deferring purchase of new equipment or something as difficult as layoffs, Deckers says. Both have been done. The plan to lay off 160, announced in October, has been fulfilled. Layoffs have occurred in the John Dempsey Hospital, the University Medical Group and Central Administration, in departments such as biomedical communications, human resources, the Chancellor's office, development and communications.
Other decisions made by senior management include deferring purchase of capital items, restricting spending and instituting rigid controls on the hiring process.
Deckers says the next initiative - improving efficiencies - yields benefits by promoting better results for the same amount of, or sometimes considerably less, effort. Centralized record-keeping and improvements in billing, collections, ordering, purchasing, inventory and distribution, he says, have all added to the current savings and the future bottom line.
Efficiency can also yield savings by improved utilization; a more appropriate use of resources. In one clinic, for example, Registered Nurses, instead of providing patient care, were scheduling patients and answering clinic telephones.
"That's work that can be done more efficiently and with substantial savings by a clerk or administrative assistant," he says. The work has now been reassigned so that the nurses are freed to do nursing.
Savings can also be obtained through integration and consolidation, Deckers says. Almost every U.S. academic health center has combined communications and marketing departments, he says. The Health Center didn't, but it does now, since senior management adopted the consultant's recommendation to consolidate marketing with communications.
In other moves to promote work integration and efficiency, senior administrators approved the reorganization of Information Technology and the integration of the Health Center's fund-raising activities and staff with that of the UConn Foundation in Storrs.
"Like other academic health centers, we too have financial exposures," says Peter J. Robinson, dean of the School of Dental Medicine. "We are working to reduce those exposures to ensure the integrity of our schools and hospital. Integration and consolidation are cost-effective ways to improve efficiencies and reduce exposure by better use and allocation of existing resources."
Of the several initiatives administrators are considering, revenue enhancement may be the most important because it offers the best potential to positively affect the bottom line, Deckers says.
Removing costs from the system and improving efficiencies can only result in certain amounts saved, since the budget remains fixed. Revenue enhancements, on the other hand, he says, increase the size of the budget. Enhancements range from making sure the institution collects on what it bills; to ensuring payment of reimbursements from managed care organizations, insurance companies and government agencies; to obtaining more research- and clinical-trial grants; to purveying new clinical services. All are under way in one form or another.
Fixing the Health Center's finances depends in large part on teamwork, collegiality and cooperation and these have been forthcoming, Deckers says. "I'm pleased with the progress we've made. This is not an easy time. But we are not alone. Medical schools and university hospitals across the country face the very same challenges we do," he says. "We can meet these challenges, and we will meet these challenges, by cooperating, communicating and working together."