Ethics of Workforce Reduction

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:

• Starting with the involvement of the medical staff is very important in this process, because the medical staff has the capacity to contribute greatly towards the resolution of this problem. Reductions in length of stay, usage and selection of medical/surgical supplies, and increases in admissions are possible and may be prioritized as an alternative to losing popular staff or important services.
• Patient care cannot be compromised and inappropriate staff reductions in some areas such as, emergency department, operating rooms, and intensive care unit could have a critical impact on the clinical capability and reputation of the organization.
• Communication with employees is critical as the issue develops. Rumors, misinformation, and anger toward management are not beneficial and are traditionally disruptive and counterproductive. Providing employees with the opportunity to identify cost-saving options, educating them on what will happen if costs cannot be reduced, and incorporating them into the process where possible has the potential to identify new approaches and to avoid mistrust of management.
• Seniority of staff is a key determinant in most union contracts.
• Union leadership involvement and participation is important also, because if union leadership has participated in the process and is comfortable that the actions were truly required, were fairly and consistently executed, and the commitment of the institution remain on patient focus, it is possible to have an appropriate and supportive response from union leadership.
• It is important to know that the more involved the board is, the greater support that will be received on this matter and the better prepared board members will be to respond to any personal inquiries they may receive regarding actions. On the other hand, financial challenges require healthcare managers to become better leaders and more sophisticated managers capable of making tough decisions. They must enhance their ability to lead the institution in the strategic planning process, take the strategic vision that evolves, sell it to the primary stakeholders, and make it work. Once key services are defined, they must have the ability to monitor and measure these programs to determine if and when they need enhancements or reductions. It is hoped that as healthcare executives deal with their financial concerns that they start by looking in the mirror and asking themselves whether they have done everything possible to effectively reduce costs, improve financial performance, and enhance the product to make it more attractive to consumers. Healthcare managers should consider that, there are additional opportunities to expand revenue, which in return will help to avoid reduction of staff if possible. Efforts in this regard should revolve around several key areas:

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.