Emory avoids major layoffs, uses worker ideas to cut $30M
Some benefits eliminated or reduced
By ANDY MILLER
The Atlanta Journal-Constitution
Tuesday, March 31, 2009
Emory Healthcare, like other hospital systems, has been jolted by an economic ?hurricane.?
With widespread job losses, more patients without insurance have sought care at Emory hospitals. And in the past six months, with the stock market drop, Emory Healthcare?s investments plunged by $50 million.
While revenues from operations remained profitable over that time, the bottom-line loss was about $20 million, said John Fox, Emory Healthcare?s CEO.
To cut $30 million in costs, though, the organization went to its employees for feedback on management proposals, and to solicit their ideas. Hundreds of suggestions rolled in, from surgeons to housekeepers.
Emory says the responses have helped achieve the cost savings without layoffs, while keeping patient care paramount. ?Overwhelmingly, employees were willing to trade off some benefits to preserve jobs,? Fox said. Among the changes approved: Reducing employees? paid time off by one day.
The financial turbulence at Emory has struck hospitals nationwide. Besides an increase in the number of patients who can?t pay medical bills, elective surgeries ? a profitable segment of business ? have declined at many hospitals. Investments have sagged. Capital projects have been suspended with the credit market?s instability.
Piedmont Healthcare, for example, in December placed on hold its $194 million project to build a new hospital in Newnan.
The recession has forced 60 percent of Georgia?s hospitals to cut staff or consider it, and more than one-third to reduce services or contemplate such a move, according to a recent survey of 63 hospitals and health systems by the Georgia Hospital Association.
The negative factors in this downturn show hospitals aren?t recession-proof, said Jim Price, an Atlanta-based consultant. ?This is the worst environment I?ve seen for hospitals.?
The overall economic uncertainty recently led Emory to suspend its $1.5 billion medical expansion project.
Emory?s Fox said, ?We?re not through this hurricane at all. The economy is still in freefall.?
Last week, Emory Healthcare told its 10,700 employees about the final cost-cutting measures. The changes include:
? Matching at 50 cents on the dollar for the first 4 percent of contributions to the employee savings plan, down from a dollar-to-dollar match. The move will save $5 million to $6 million a year.
? Eliminating extra pay for certain shifts and jobs.
? Eliminating additional pay for working the day after Thanksgiving and on Christmas Eve.
? Ending a bonus for referring a successful job candidate.
?We got incredible response on different ways to save money,? Fox said. One group of nurses suggested switching to wireless technology in their area. The savings will be $120,000, he said.
Large-scale layoffs are off the table for now, Fox said. But he said, ?If we need to make spot reductions, we?ll continue to look at that.?
Les Hough, an Atlanta-based consultant on workplace issues, says soliciting employee ideas is common among higher education institutions and unionized companies, such as the automobile industry.
?It?s happening quite a lot in recent months,? Hough said. The tactic can lead to more employee buy-in of the final strategy, he said.
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