Reducing costs doesn't necessarily mean eliminating jobs. Just look at Brookwood Medical Center, the second-largest hospital of American Medical International, a Dallas-based 38-hospital chain.
Since embarking on a cost-cutting effort in late 1991, the number of jobs at the hospital has increased 23% to 2,300. Even so, the restructuring effort has saved $14 million to date while increasing levels of service. The 586-bed hospital expects savings to amount to $9 million annually. In 1993, Brookwood had profits of $7.5 million on revenues of $169.2 million, according to HCIA, a Baltimore-based healthcare information company.
"We needed fundamental change, not incremental change," said Greg Burfitt, the hospital's CEO. Because of the restructuring, 871 Brookwood employees had their jobs changed in some way. About 200 of them had to be retrained completely.
As part of the "operations restructuring," every job in the hospital was evaluated. When the layer of vice presidents was eliminated, Mr. Burfitt dropped his title of president. He'd been told he couldn't be president because Brookwood no longer had vice presidents.
Eliminating layers of management and creating a multiskilled worker called a "patient-care associate" produced significant savings for the hospital.
Management positions at Brookwood were reduced to 12 from 58.
Expenses also dipped and are expected to continue to drop. For example, operating expenses per equivalent patient day dropped 5% to $4,208 in 1994 compared with the previous year, and are budgeted to drop another 4% in 1995 to $4,023.
Obviously, fewer managers and more worker bees save money. That's documented in the average hourly rate paid to Brookwood's 2,300 workers (See chart, above). The rate jumped to $13.34 from $13.06 between 1992 and 1993, but dropped to $13.07 in 1994. It's budgeted to drop to $12.41 in 1995.
Pooling efforts.One of the first departments to be restructured was the critical-care unit. In the past, staffing on the unit consisted of one registered nurse for every two patients. Now, it's one registered nurse and a patient-care associate for every three patients.
The associates do a host of different chores, ranging from bathing and turning patients to clerical work. The nurses' time is spent planning, evaluating and implementing patient care. "We're doing the things you were taught to do in nursing school, but once you got into the real world, you never had a chance to do," noted Carla Crawford, operations leader of the critical-care unit.
Although some of the older nurses were unsure about the changes, "nurses with less than five years of experience really welcomed it," Ms. Crawford said.
The unit previously had three licensed practical nurses, whose positions were eliminated as part of the restructuring.
Employees whose jobs were cut were referred to a retraining pool. Many other workers were funneled into that pool as well, including those in departments that were decentralized such as housekeeping, phlebotomy and respiratory therapy.
"(Workers in the pool) could try up to two different kinds of jobs," Mr. Burfitt said. "If they didn't like the first one, they could try another."
Last month's announcement that AMI will merge with National Medical Enterprises was met with enthusiasm by Mr. Burfitt. "There are benefits to being part of a $5.3 billion company," he said. He hopes the deal will lower the hospital's overhead costs.