12 - The Michigan Daily - Wednest
day, May 29, 1996 THE Focus
DownY"s iz ing the
For years, hospitals across the natin have been felig pressure
from an edcare compankes. Now the University kMedical Center
one ofthe Taigest ini the nation, is' downs&kzg zni order to keep up
wi the changt g costs and priorities zi the 7health care market
Why did these cifanges occur now and what instigated them?
-By Kali Wang, Daily News Editor protests the cuts May 16.
May 16: Regents
chastised about cuts Sor many of the more than 8,000 University
at public comments hospital employees, the bad news came as a surprise.
session; protest held The announcement that the University Medical
outside of'Union. Center's workforce would shrink by 1,100 positions
within the upcoming year sent shocks throughout the
N May 29-30: First hospital. The tidal wave pressures from managed care
wave of cuts expect- companies finally crashed at the shores of the
ed to be announced. University Medical Center, and hospital employees
were feeling the effects of the changing health care
The University Medical Center, considered one of
the finest, is the not the first hospital to bend under the
pressures of managed care companies. Within the past
decade, hospitals across the nation, from California to
The University can do it slowly
and painfully ... but the longer it
takes, the more difficult it is to
- Roberta Graham
Vice President, University HealthSystem Consortium
Massachusetts, have made adjustments in manage-
ment styles to accommodate the rapidly changing
health care market.
It is a market that is dictated by managed care com-
panies, which were designed to act as a middle-man
between patients and medical care. Managed care com-
panies, help patients find the best care for the lowest
price, and in turn apply pressure on hospitals to provide
patients with the cheapest care. The setup has resulted in
shorter hospital stays, a decrease in the number of in-
patients, and pressures to reduce costs and use of hos-
pital services, thus cumulating in a trend to downsize or
merge to remain competitive with other hospitals.
"Managed care companies pressure quick utiliza-
tion and low prices," said Christine Malcolm, vice
president for managed care and network development
at the University HealthSystem Consortium in
Chicago. "They pressure hospitals to reduce costs."
Academic medical centers in particular are experi-
encing the brunt of the pressures. Unlike community
hospitals, the duties of academic medical centers, such
as the University's are threefold: clinical care, teach-
ing and research.
"We have a number of admissions who don't pay
for themselves - not adequate revenue and unfunded
elements - so we're pressured more than community
hospitals," Malcolm said.
Last year, Massachusetts General Hospital, affiliat-
ed with Harvard University, unveiled its plans to
achieve cost reductions under its "Operations
Improvement" program. The program, implemented
in three phases, aims to make the hospital more cost
competitive while improving patient satisfaction.
In February 1996, MGH announced that it planned
to eliminate 418 positions from its workforce of 6,400
Roberta Graham, vice president for operations
improvement at the University 'HealthSystem
Consortium, said employee cutbacks are unavoidable
because approximately 70 percent health care costs
are related to labor
Graham said the University of Michigan had two
options in making staff reductions: quickly and swift-
ly, or slowly and painfully.
"The University can do it slowly and painfully ... tor-
ture people for a long time," she said. "But the longer it
takes, the more difficult it is to maintain morale."
The St. Joseph Mercy Hospital in Ann Arbor has
been in an ongoing process of decreasing its staff size
The hospital also-
merged with three
because of a drop
in the number of a.
medical centers at
the University of
H a r v a r d
Johns Hopkins k
also been forced
to re-design their
"I think it is
very difficult and
very painful, but
bly cannot escape
at this time"
Malcolm said The University Medical Center's wo
she was surprised shrink by 1,100 positions this year
that the three-year plan to downsize and be
Michigan was able to sustain the pressures of man-
aged care companies for so long.
"I think it's amazing it's taken so long to hit (the
University of) Michigan," Malcolm said. "A lot of that
is because there are capable (hospital) leaders."
However, many of the University's hospital employ-
ees, would disagree with Malcolm's praise for hospi-
At the medical center on a Saturday, all of the
employees interviewed, requested to remain anony-
mous. They said they feared losing their jobs.
"Jobs are really tight right now. If they found rea-
sons to fire someone, I think they would," explained
one pharmacy technician.
Carefully choosing her words, "Alice," a nurse who
has worked at the hospital for almost 10 years, said
"the bottom line is people want to give patients good
health care and we have to keep up with the changing
health care climate."
Another nurse, "Janet?' spoke angrily about the
cuts, accusing the hospital of being "disrespectful to
employees' individual needs."
"There's a lack of trust, a breakdown of trust?" she
said. "I think the moods of people are very down an*
many people do not understand why this is happening?"
John Forsyth, executive director of the University's
hospitals, forecasted "fundamental changes" in how
care would be delivered when he presented the hospi-
tal's 1996 fiscal year operating budget to the University
Board of Regents at the May
1995 regents meeting.
EOne year later. on April
26, the University
announced that it had sc
su-cumbed to the pressures o
the health care market. At
press conference, Lloyd
Jacobs, associate medical
_ school dean, cited the hospi-
tal's high cost-per-case
basis, approximately $8,600,
and about $2,000 higher
than comparable hospitals,
as a principle reason for the
hospital's plan to trim $200
million from its budget i*
the next three years. $60
million are expected to be
slashed from the 1996-97
budget, of which about $39
million will be from staff
reductions. This translates to
a loss of about 1,100
employees, with more cuts
to follow in the next two
"This is one of the best
kARGAETsssx tS/Dily hospitals in the country and*
rkforce is expected to think we can make. it
in accordance with it. through this and still be the
come more cost-efficient. best, said University
President James Duderstadt.
There is no official word on how the cuts will affect
the research and academic roles of the hospital, but
Duderstadt said the clinical, teaching and research
sites at the hospital would be preserved.
Third-year nursing student Jennifer Jorissen said
she wasn't worried about receiving clinical training
but she was concerned about the job market.
"It's discouraging when you're looking atjob place-
ment for next year," Jorissen said.
Now hospital employees must wait and hope their
jobs aren't lost to the changing health care market.