In its second major layoff in a year, the Joint Commission on Accreditation of Healthcare Organizations last week eliminated 97 positions at its headquarters in Oakbrook Terrace, Ill. Of those positions, nearly half were vacant, leaving 49 individuals who actually lost jobs.
The positions eliminated are mostly involved in producing surveys: schedulers, processors, filers and their managers, plus others in information technology and human resources.
The accrediting agency blamed the layoffs on the ripple effect of Medicare spending restrictions imposed by the Balanced Budget Act of 1997, especially those on home health and long-term-care organizations.
The Joint Commission's volume of accrediting business has drastically declined as those providers have merged, closed or declined to maintain accreditation.
In 2000, the JCAHO projects that it will perform 1,902 home health surveys, down more than 20% from the 2,399 it performed last year.
Dennis O'Leary, M.D., the JCAHO's president and chief executive officer, said the organization will still meet its projected $4 million profit this year. But its total revenue will fall short of projections by $8 million, coming in at about $119 million. Expenses have been reduced to about
$115 million from the original $123 million.
The loss of the 97 positions should save about $3.5 million, not including benefits, but those savings won't appear until the 2001 budget year because of outplacement and severance costs this year.
"When something significant happens in our environment, like the (balanced-budget law)," O'Leary said, "which has a negative impact on our survey volume, that happens to us not during one year but during three years," as organizations come up for their triennial accreditation surveys.
However, the JCAHO's operations have ballooned during the past decade.
In 1990, when its annual revenue was about $55 million, it opened its new $23 million corporate headquarters. Five years later, annual revenue had jumped nearly 75% to $96 million. This year's budgeted revenue of $127 million represents a jump of another 33% compared with 1995.
Last September, the Joint Commission eliminated 79 positions, and in April it dropped 10 positions at Joint Commission Resources, its consulting arm. Total employment at the JCAHO, not including surveyors, stands at 491 positions with last week's cuts.
Last month, the JCAHO proposed shortening accreditation survey cycles to 18 months from three years, but the agency said the proposal was not financially motivated (June 12, p. 2).
Surveyors will be next to feel the pain, O'Leary said, with unspecified layoffs set to be announced before the end of July. He did say those layoffs won't be as large as the central office cuts.