Ethics of Workforce Reduction
By Mohamed Refaat, MBA, CPHHA.
In the last several years, most of the hospitals faced increasing financial concerns. The dilemma these hospitals face reflects the variety of problems that are common to most hospitals. These problems result from a number of specific issues, such as decreasing reimbursement, uncompensated care, increasing competition, volume, increasing costs, and personnel costs. Also, they face the difficulty of common to all healthcare providers in actually receiving payment it is due for services that they provide. At the same time the financial pressures that insurers are facing appear to have encouraged them to find methodologies to make billing more difficult, to find justification for disqualification of bills, and in many circumstances to engineer significant delays in providing reimbursement for services that are properly billed. Also, hospitals and other healthcare providers are experiencing dramatic increases in the costs associated with providing care. Drug expenditures have risen at a double-digit rate for the last three years. Medical/surgical and other supplies also continue to experience inflationary increases that exceed annual reimbursement adjustments. These combined pressures have resulted in the difficulties that are presently being faced by healthcare providers. As in most healthcare organizations, the highest portion of expense is associated with staff. But in case if it is decided to reduce the staff, we must consider the following determinants:
A- Ensuring that payment is received on a timely basis and at the highest amount for services rendered through:
1) Decreasing days in receivables as much as possible.
2) Reviewing charge rates may identify possible areas of improvement particularly in areas such as operating rooms and ambulatory services.
3) Analysis of individual insurance agreements may allow consideration of renegotiation of contracts.
B- Review of patient volume to ensure that the highest volume of patients is obtained for each service rendered through:
1) An in-depth inspection of admission rates by physician and service, combined with a yearly analysis of market share data will help identify changes or opportunities in volume.
2) An analysis of patient satisfaction scores is important as it may clarify additional reasons why patient volume is being affected.
3) New and additional service opportunities are explored in depth to identify all available revenue sources.
C- Hospitals have the opportunity to work collectively with other hospitals and merge certain services to avoid duplication, reduce costs, and enhance the overall quality of programs provided such as jointly run MRI or other radiological test centers, centralized laboratory systems, and support services such as laundry, freestanding security services, and ambulance services. Also, joint operating agreements may allow competing hospitals to collectively work together and share the benefits saved by avoiding duplication, because the end result will be significant savings and improved utilization by both parties.
D- It is important to understand that the hospital’s capabilities to maintain their commitment to community health programs must be given priority. And in case programs of this nature may incur front-end financial losses, there will be political costs associated with closure of a program of this type.
The ability to deal with these areas will separate the successful and ethical healthcare manager from the pack.