In the comment section of a post below, two doctors bemoaned the proliferation of vice presidents and other administrators in many hospitals. I replied that this was often the case, but that it was my impression, too, that very often the medical staff have little or no idea of the personnel needs of complicated places like hospitals. It is often easy to blame clinical or budgetary woes on "the overhead", especially when you have had no experience in administration.
I said, "I'll give you an example in a future post, and you can be the judge." Here it is. First, a thoughtful note from one of our most loyal, engaged, and best doctors, whom we'll call Sam, to our Chief Operating Officer:
In your August letter to the Board you wrote: "The key to making this operating margin for the year is expense control…" and yet immediately following you note that you are creating "a new senior leadership position to oversee all employee safety related issues and activities." You mention that you "...gathered all the leaders in various aspects of employee safety - from Occupational Health, Radiation Safety, Infection Control, Environmental Health and Safety, etc…" to discuss employee safety (I'm curious how many additional leaders there were in the etc category). There would appear to be plenty of existing senior leadership and expertise to oversee employee safety. Is it necessary and politically wise at this time when everyone else is being made to make personnel cuts (I understand more are coming) and not to replace open positions, to add this position?
Why can't this long list of leaders attend to issues of employee safety which I agree are important? Furthermore, why is a search consultant being employed which will cost an additional 20-30% of the individuals salary? Again, it seems like this is a luxury in this time of belt tightening that is hard to justify. I'm sure there are injuries to be prevented, money to be saved, and public relation points to score, but wouldn't it be better to hold this long list of present leaders in employee safety accountable for improving employee safety? I hope you will reconsider this decision or more adequately justify it to those who are questioning its need.
To which Eric replied:
Thanks for your thoughts, but I can’t agree with you on this one.
Even in times of constraint, we still have the run the institution, and that means setting priorities and spending and investing where necessary. This is one such area, in my opinion.
We have distributed responsibility for different aspects of this problem but no overall coordination and no clear responsibility. More importantly, we don’t have enough detailed subject-area expertise in this area. The issue has been turfed out to folks already burdened with other significant clinical and administrative responsibility. Our organizational structure and resources devoted to safety compares very poorly to any medium-sized manufacturing or construction company, and we have much higher rates of injuries. There’s a connection, I think. While most of them are not of the death-and-dismemberment type, many are serious or potentially serious, and I can’t justify 800 or 900 employee injuries a year. Despite ongoing efforts to improve, we’re not getting anywhere. We need a different approach.
I’m in the process of pulling together a more comprehensive analysis of the financial impact of the current situation, in medical treatment and medications, workers compensation costs, short-term and long-term disability costs, admin costs associated with comp and disability claims, return to work and wellness programs, and the staffing expense in the Occupational Health department associated with responding to injuries. I don’t know what that number is yet but it is many multiples of the cost of better leadership, and I fully expect that once we get an effective safety program in place, the result will be significantly lower overall cost. That’s been the case in most private sector industries, which probably explains in part why they are so far ahead of healthcare with respect to safety. A good record in protecting employee safety will more than pay for itself.
I don’t know what you are hearing about personnel cuts, but the budget that we will send to the Finance Committee later this week includes increases in positions over the staffing levels at which we are currently running. There will be a few areas where VPs have decided to lay off a current employee to make room for a critically needed hire. I expect there will be about a dozen or so such moves, in the context of a budget that includes funding more than 6100 FTEs.
Sam, I have never been someone who has added overhead for its own sake to any organization for which I’ve had substantial responsibility. By my count, I am net –1 in senior administrators reporting to me since coming to the Medical Center two years ago. The people I have brought in from the outside – Walter Armstrong for construction & capital facilities, and very recently Bob Cherry for food service, housekeeping and other support services – have both immediately generated very significant savings for the hospital. In FY ‘10, we will fund every single one of the highest priority projects for capital investment, in large part due to a very good process that Walter structured that significantly improved physician involvement in setting priorities. And last week Bob Cherry submitted a operating budget for his areas that was almost $2 million less than ‘09, without reducing service. In both cases: strong management, deep subject area expertise, strong partnership with physician leadership. I’m confident we can do the same in employee safety.