Signs of spring in the neighborhood

From this past weekend: The stream on the Glacial Hill trail at the Mass. Audubon Sanctuary in Natick was no longer frozen over, so you had to use the rocks to get across; new buds were appearing in slightly warmer parts of the garden; and the ducks at Crystal Lake in Newton finally found a bit of water in which to swim.

Today will be sunny and in the 50's. Is it really spring? Well, in Boston, you are never quite sure, but St. Patrick's Day is the traditional day to plant peas in the vegetable garden. Did you plant yours yesterday?

On the air with Dan Rea at WBZ

I just returned from an hour-long radio show with Dan Rea, host of a talk radio program called Night Side on WBZ radio here in Boston. The topic was the budget and personnel issues at our hospital, and the fact that many employees are willing to make personal sacrifices to help reduce layoffs and adverse impacts on lower wage workers. As always, Dan was thoughtful and polite, and several callers to the show likewise had interesting observations and question.

I ran into two others in the studio. One was Charlie, seen sleeping above. Dan reassured me that he often sleeps during the show, and that it was not a reflection of my answers to his questions.

The other was Jon Keller, a political reporter with the affiliated TV station. I have known Jon for years, dating back to his days as a cub reporter. He reminded me of an interview we did back in the late 1980s, when I was running the local water and sewer system. It was being broadcast at about 6pm. His question was, "Can you please explain what sludge is?" My reply, "Do you really want me to answer that question while people are enjoying their supper?"

Good progress in budget deliberations

Here's a message I sent out to the staff last night. It is a follow-up from town meetings and the previous budget message.

Dear BIDMC,

It has been a very busy couple of weeks, with thousands of you attending town meetings and sending suggestions to me personally or on our chat page. As promised, here’s my analysis of the options we have considered and suggestions for going forward. This is going to be a long message, so grab a cup of coffee while you read it. I apologize if I don’t address each and every idea that has been suggested, but I am pretty sure I will cover the major ones. At the end of this e-mail, I will tell you how you can best provide input into the next stage of this process.

First, though, an important summary. Your participation in this process and your advice to me has succeeded in accomplishing two very important things: First, we have reduced the number of necessary layoffs dramatically, from over 600 to about 150. This is a major victory and will mean a lot to more than 450 families who would otherwise lose their income from BIDMC. Second, we will do this at the same time we provide earnings protection to our 900 lowest wage workers. As you will see, this does come at a higher cost to the rest of us, but you have all made clear to me that this is consistent with our community's values and expectations. Thank you in advance for your generosity of spirit.

The Situation
Unlike the years leading up to 2002, when most of the hospital’s problems were self-inflicted, we are finally seeing the effect of the general economic downturn on our hospital. As you know, these problems are not ours alone. Our sister hospitals in Boston and across the country, as well as institutions and companies all over America, are facing similar situations. BIDMC has had seven years of extraordinary growth: Our revenue has grown from about $800 million to $1.4 billion and our staffing has grown by over 2000 employees since 2002. But the brakes must now be applied.

The main problem we face is a likely budget imbalance in FY2009 because of reductions in state funding, a slowdown in research spending, and because the number of people we have on staff is not proportionate to our expected level of patient volumes. After at least two years of volume growth that exceeded the regional average, it has slowed down considerably. Some of this is due to the economy, with people deferring medical care. Some portion is due to the fact that the state no longer permits diversions from emergency rooms. In the past, we benefited from diversions in other hospitals, but that has now diminished.

The problem for FY2010 will be more of the same, but it is also compounded by a likely requirement that we will have to make a large cash contribution to the pension plan, and also because we continue to project lower than adequate reimbursements from Medicaid and Medicare. For example, President Obama has proposed a reduction in Medicare payments to hospitals and doctors as part of the “down-payment” on expanded access to health care.

We do not want the hospital to end either of the next two years with an operating loss. Therefore, we believe it is prudent to aim for cost reductions of about $20 million in the remaining six months of FY2009 and at least an additional $20 million in FY2010. My focus in this note will be on FY2009, but many of the steps we take now will also be helpful going forward.

Savings Across the Medical Center
While it is possible to reduce expenses other than personnel, e.g., energy and supplies, these reductions would not be significant enough to eliminate the need to look at personnel-related expenses. We have already taken some major steps to save funds in our research budget. The largest single item is that we will be decreasing the amount of research space that we are renting. But that change will not have an impact until FY2010. The major step we have taken this year was our decision not to fill many positions throughout the hospital. During the last several months, at least 100 vacant positions have not been filled, blunting the previous growth rate in staff.

The personnel budget, including benefits, is about $545 million per year. A $20 million savings is thus approximately 4% of this amount. If we were to accomplish this in layoffs alone, we would have to eliminate over 300 jobs. (This is based on an average cost of $80,000 per employee. This number may surprise you, but it is a “fully-loaded” figure, including all benefits, taxes, and the like. Also, this has to be offset by the amount of severance pay for those people laid off.) With 6,200 full-time equivalent employees currently on staff, this would be nearly 5% of the current staff.

But that is on an annual basis: To achieve the same savings in the remaining six months of the fiscal year, we would have to double the number of people laid off, or over 600.

Our task, it seems to me, and the one with which you have been so helpful in your comments, has been to come up with alternatives that dramatically reduce this number of layoffs and get us close to these total dollar figures. With the strong support I have felt from many of you, I also am trying to shield our 900 lowest paid workers – transporters, food service people, housekeepers and others – from impacts on them and their families. As we have discussed at our town meetings, this will mean a bit more sacrifice from the rest of us, but I sensed a clear commitment to doing that.

Here are my suggestions to meet the likely budget shortfalls. I have outlined here my initial proposal of steps, along with their impact they would have on the budget. It doesn't look to me, at this point, like a menu of options is workable – financially or logistically. In other words, I had hoped to give you some individual options to choose from, but, as you will see, all of the items mentioned below would be necessary.

1) Temporarily discontinue the employer match to the 401(k) plan and the contribution to the executives' 403(b) plan. We currently provide up to a 2% match to the 401(k) plan. The savings from suspending these two types of contributions amounts to $3.5 million for the remainder of FY2009. We would expect to reinstitute these payments in FY2011.

2) Withhold the 3% annual salary increase for those people who would receive it on April 1 and thereafter, exempting people in Grade 4 and below, as well as our residents (physicians-in-training). This freeze on raises would stay in effect through FY2010. The savings from this will be $2.4 million in FY2009.

3) Re-set the salaries for managers and directors to their level before the 3% salary increase received on January 1, 2009. This will save $540,000 in the remainder of FY2009.

4) We had reserved $3 million in the budget for market adjustments in certain highly competitive job classifications. We will choose not to use those funds, saving that money in FY2009.

5) Suspend earned time accruals for five weeks of payroll. This means people will not accrue 3 to 4 days of earned time between April 1 and the second week of May. Then, accruals will start again at the regular rates. This will save $2.8 million in FY2009.

6) Eliminate the ability of people to cash-out their surplus earned time days. Those days would remain in each person’s “bank” for short-term disability purposes, but could no longer be received as cash until an employee leaves BIDMC. This will save $1.0 million in FY2009. (Note: Unlike the other proposals listed here, this one goes into effect immediately.)

7) Continue to reduce payroll by attrition, leaving the vast majority of open positions unfilled, saving $1.25 million in FY2009.

8) Eliminate the employee barbecue this year, economize on other events, and eliminate most hospital reimbursements for cell phones and Blackberries (more on this below), for a savings of about $100,000.

9) On top of this, we will save $1.4 million in the voluntary pay reductions taken by the senior VPs, the VPs, our Chief Operating Officer, and me.

Taken together, these actions would save about $16 million in FY2009, eliminating the need for about 450 layoffs. This is a major step in the right direction! Unfortunately, it does not get us all the way there, and we would still be about 150 positions overstaffed for FY2009. How would we deal with this?

Layoffs and Department Responsibilities
Our first guide to reducing our staff will be based on structure and performance. What do I mean by structure? Many of you have pointed out that there are too many management layers in some cases, and reducing these would be consistent with “flattening” the organization and responding to some of your concerns.

There are also a few departments that are clearly overstaffed relative to the amount of work that needs to be done and will likely be done during this recession. Those departments will be given an overall budget reduction target, and the vice president in charge will have to come up with a plan to meet that target. This might result in some layoffs or it might result in other operational changes or reallocations of staff or managers.

It is clearly our intent to look first at managers and staff who have consistently substandard performance. We will look at performance reviews, your comments on the employee survey, progressive discipline records and other performance factors in making these decisions. We will not make them lightly, but we want to retain employees who work hard and come in on time; managers who have great people and management skills; and employees throughout the organization who make important contributions to patient care.

Finally, we are exploring incentives for early retirement, so that people could voluntarily choose to leave. We are thinking about a plan, say, for people 62 and older, who would be able to leave with their full severance payment but also with an opportunity to continue health insurance coverage at employee rates through age 65. More details will come on that in a few days.

Will This Be Enough?
All of this would likely close the gap for FY2009, but we have to understand that there would be some uncertainty about that for FY2009, and there is still more uncertainty for FY2010. But I would want to defer action beyond this and see how things work out for us and the national and state economies. Only if still needed after these steps would we return to the idea of other layoffs. I expect we would review that early in the summer, and of course, will keep you all informed as we go along.

Your Other Suggestions
Let me address some of the other ideas and suggestion you have brought up. Although they do not amount to a lot of dollars, they have symbolic importance, and we should probably be considering them anyway, in terms of the efficiency of our hospital.

Many of you have offered to voluntarily give up prior earned time and/or make charitable donations to the hospital. We will certainly make that possible and will send out information on how to do it. To the extent that people contribute in this way in the next few weeks, we will be able to see the dollar value of that and apply it against payroll reductions.

I have not adopted suggestions made about furloughs (unpaid leaves of absence); eliminating tuition reimbursement; and eliminating the pay differential for holidays. The problem with furloughs is that we generally have to backfill vacancies, often with overtime pay, so the savings are not that great. Also, there is a large administrative burden associated with this measure. I am loathe to eliminate tuition reimbursement because I do not want to abandon our goal of providing professional advancement for people. In addition to the personal value of these payments, they are important for the long-term viability of our workforce. Finally, holiday differentials in pay are needed to give people an incentive to work on holidays.

There are several hundred people on staff whose cell phone service and/or Blackberry service is reimbursed. Except in special circumstances, I have trouble justifying that. Some people who need to have quick and complete information on technical problems should be reimbursed for these services. But for the vast majority of people, a cell phone is something they would likely have anyway and a Blackberry is handy, but not a necessity of the job. Accordingly, we will do a complete review of who is being reimbursed for these services and will discontinue that reimbursement if we find that it is not necessary. I am guessing that this will save $100,000 for a full year.

Many of you have asked that we cancel the employee barbecue this year. I think that social events for our employees are important for our overall sense of community, but the $50,000 for this occasion is very hard to justify this year, and so we will cancel it. You have also suggested that we economize on other events, like the nursing awards, years-of-service recognition, and so on. We will do so, but we will not cancel them. It is good and important to recognize people for special service.

Many of you have suggested a reduction in catering and meals at meetings in the hospital. In my last e-mail to you, I suggested that this did not appeal to me. Meetings are often scheduled during the times that people would otherwise be having lunch or breakfast, and it seems to me to be appropriate to feed people in these settings. Nonetheless, I will defer to your comments and will say that the hospital will no longer pay for meals for staff people at meetings. Light snacks and drinks, however, will be permitted. I cannot estimate what the savings will be from this measure. (An exception: The meals prohibition would not apply to residents' educational sessions.)

Some of you have asked me to cancel our partnership with the Red Sox. I cannot because it is a contractual obligation, but I would not in any event. This is an important part of our marketing and community presence. The Red Sox are the strongest brand in the region, and our affiliation with them leads to multiple benefits for the hospital. Our name is seen and heard by 2 million fans per year at Fenway Park and millions more on radio and television during the games. We could never afford to buy that kind of visibility with traditional advertising. Our first aid crews provide medical care to thousands of patients each year. We are also involved in important community activities, like the Red Cross Blood Drive and the Scholars Program, with the Red Sox. When the Red Sox sought an "official hospital" six years ago, every hospital in Boston wanted the partnership, and they still do. I was very proud that they chose us, and I still am. In any event, as mentioned, this is a contractual obligation.

There have been other suggestions regarding staffing of the PACUs and other clinical areas. We will continue to review those. There have been suggestions with regard to energy conservation and recycling. We already have strong programs in those areas. For example, as a result of energy efficiency steps, our energy use is the same now as it was when we had 2000 fewer people working here several years ago. Nonetheless, we will continue to pursue enhancements in these areas, but I cannot quantify savings that I can count on at this time. Ditto for other operational improvements, like changes in laundry collection practices.

Now, for your reactions to this list of more concrete options: We have set up a new chat room called Budget Forum 2. See the BIDMC SPIRIT site or the link under “announcements” on our general portal, and each of the major proposals has its own "chapter." Please offer your thoughts there until 5 p.m. on Thursday, March 19. (The original Budget Brainstorm chat room will remain up for observation, but it will no longer be possible to post comments there.) It was great to see the overwhelmingly positive and heartening feedback on our first forum. While there was a small number of commenters who engaged in meanness and sarcasm, we are not going to let that interfere with our goal to give everyone here a voice. I'll ask again: Please use this forum in the way intended, i.e., to comment on these ideas in a polite fashion. (In this next round, we will delete comments that are inconsistent with our values and the purpose of the forum.)

And, of course, feel free to write me directly as well by return e-mail.

I will issue another e-mail within a week with my final decisions and more details on these matters.

Thank you for your patience and involvement as we work through all of these issues. Our commitment to excellent and compassionate patient care and superb research and teaching will continue unabated, and we will come through all this fine.

Sincerely,

Paul

Paul F. Levy
President and CEO

New Joint Commission blogger

Jim Parker, Senior Editor and Publisher at the Joint Commission, has started a new blog called Perspectives on Patient Safety. The focus of the blog is on patient safety issues, the Joint Commission's National Patient Safety Goals, and the prevention of sentinel events. Check it out here.

The adverse selection problem

A Boston Globe editorial today supports a point I made a few days ago about the conflicting objectives the president and Congress will face as they attempt to provide greater access to health care to Americans. It will be difficult, if not impossible, to provide such access while also controlling costs.

The editorial focuses on President Obama's proposed new, Medicare-like public insurer for consumers younger than 65, saying, "By backing a public alternative, Obama showed he understood the necessity of an affordable option for those who cannot get work-based insurance, either because their employer does not offer it or because they aren't working.

"The need for such a public provider - and yardstick - is vividly evident in Time magazine's March 5 cover story. Reporter Karen Tumulty recounts in heartrending detail her time-consuming effort to get an insurer in Texas to pay for treatments for her brother, who suffers from kidney disease."

Referring to the recent Massachusetts legislation that provided expanded access, the Globe notes: "In Massachusetts, reform won such broad support in part because the bill focused solely on expanding access to the uninsured and did not attempt to control health cost inflation at the same time."

Indeed, Massachusetts ended up being surprised at the cost implications of its access program. Uninsured people who had not had good primary care for years or who had been forced to let health problems mount caused a surge in costs for the system as a whole. This is a variant of the adverse selection process often discussed in the insurance field -- creating a product that tends to recruit the higher risk cohort of society.

The Globe goes on to say, "This could work in a relatively rich state, in which healthcare and medical research are seen as economic mainstays. But evading the difficult choices that cost-cutting requires is not an option for Congress."

The editorial concludes: "Ratcheting back the nation's medical bills while also extending coverage in a way that commands a solid congressional majority is a daunting task."

As I note in my earlier post, cutting Medicare payments -- both for existing products and for the new ones that would arise from expanded access -- is not a way to cut costs. It is simply a way to cut federal appropriations.

Even if you believe that, over time, better access to primary care and other early-stage care will reduce costs, you still face the multi-year problem of a surge in health care costs when access is expanded.

In my view, the only way to control costs in the short run is the one outlined by MIT's Steven Spear, a huge and dedicated focus on process improvements that would eliminate the major bolus of costs in our system -- the harm we cause to patients. The tools for doing that are in the hands of the health care profession. Our failure to use them and demonstrate that point leaves Mr. Obama and Congress with the only alternative they have, lowering payments to providers.

Pay it forward

While many of you have submitted comments on this topic, I have avoided posting anything about a recent Boston Globe article written by Kevin Cullen about our town meetings and other events at BIDMC because, frankly, it was a bit too complimentary to me personally. But, there was something about the article that captured the imagination of lots of people, especially during these hard economic times. Yahoo posted it on its homepage that day in the "featured" slot; a bunch of my Facebook friends posted it on their home pages; over 13,000 (!) people emailed to their friends from the Boston.com website; over 800 people submitted comments about the article on Boston.com itself; and Kevin, too, received hundreds of emails.

But I overcame my reticence on this because I need to share with you this email Kevin received. It is really, really wonderful. Perhaps writing about it here will help spread the word to others.

JUST WANTED TO LET YOU KNOW SIR AS A BUSINESS OWNER MYSELF HERE IN FT.LAUDERDALE, FLORIDA. PLEASE LET MR.LEVY KNOW THAT MY HEART AND MY BLESSINGS GO OUT TO HIM AND I THINK THAT HE IS ON THE RIGHT TRACK. I ALSO MAY NEED TO LAY OFF SOME OF MY STAFF BUT AFTER READING HIS STORY I SHALL RECONSIDER. AFTER I READ THIS STORY I HAD A MEETING WITH MY STAFF AND THEY ALL CAME TOGETHER AND ARE ON THE SAME OPINION AS HIS STAFF AND I THINK THAT WE WILL TRY DIFFERENT MEASURES TO TRY TO KEEP ALL OF OUR PEOPLE WORKING. I REALLY THINK THAT THIS NEEDS TO BE ON THE NEWS WORLDWIDE. THE MAN TO ME IS A HERO. THANK YOU FOR YOUR REPORT SIR. IT MADE MY LIFE AND MY EMPLOYEES LIFE A WHOLE LOT HAPPIER TODAY. THANK YOU AGAIN.

VICE PRESIDENT OF EXPERT DIESEL
BOB RUIZ

In the trenches

With all the talk about the bad economy, a little humor sometimes is helpful. One of our chiefs sent the attached as a type of advice and warning about how to decide about layoffs. Caption: The economic situation has gotten so bad we may have to lay off Andre.

Thanks to Jackson Memorial

I’ve just returned from giving a lecture at a management training session at Jackson Memorial Hospital in Miami, Florida. Jackson is a large, county-owned hospital with an annual budget just under $2 billion. The hospital has been running a leadership conference series for many months, and today’s session was entitled, “Achieving Success & Quality through Transparent Leadership.”

Now, here’s the funny thing. Although the assembled group was new to me, I was not new to them. Apparently they had used the Harvard Business School case about my first six months at BIDMC in earlier sessions. That six-month period, as I have written here before, followed a five-year decline in the BIDMC after the merger of New England Deaconess Hospital and Beth Israel Hospital. My job at the time was to conduct a turn-around of the hospital and get it on a sound financial footing.

Today’s topic, in contrast, was focused on improving hospital processes through engagement of staff at all levels in the institution. People were very interested in our approach to transparency.

They were also intrigued with the blog, and so I took these pictures so they could be participants in this posting!

Maybe two out of three?

I heard President Obama speak several days ago about his plans for health care legislation. As I recall, he said he was hoping for three things: (1) a reduction in health care costs; (2) an increase in access for people currently uninsured or under-insured; and (3) maintaining choice for people in their selection of doctors and hospitals.

While I admire his goals and hope for the best, I don't see how all three are possible. The Massachusetts experiment with access, i.e., giving insurance to a much broader group, has actually led to higher costs as people use that access for care. Now, over time, this will hopefully level out, as the value of preventative care spreads, but it could be many, many years before that effect is seen.

On the cost front, the president for now seems to be confusing underlying costs with how much the government chooses to pay. His budget proposal apparently would reduce Medicare payments to doctors and hospitals as a way of building a savings account for greater access. Reductions in appropriations might reduce costs to the federal government, but they do not reduce the underlying costs of care. With 50% of American hospitals operating at a deficit right now, it is hard to imagine how a reduction in federal payments for Medicare patients deals with the cost problem. Costs remaining uncompensated by the federal government would simply be spread to other patients.

Finally, other countries that provide universal access usually take away a great degree of consumer choice in doctors and hospitals. Instead, a parallel private insurance system often emerges, outside of the government plan, to provide such choice -- usually to wealthier people.

So, it seems to me that we could accomplish two-thirds of the Presidents goals, but that it would be difficult to obtain all three -- at least in the foreseeable future.

Your thoughts?

Please check with mom before writing

As noted below, we are holding town meetings with our staff to get ideas on how to narrow our budget gap. Several hundred people have attended so far. In addition, I have received countless emails with questions and suggestions. People have been honest, forthright, curious, attentive, and sometimes even humorous.

And then we have also set up a chat room for people to submit comments. Here, they can do so anonymously. Just like blogs and comments on posted newspaper articles, the vast majority of people are civil, polite, and appropriate; but then there are a few people who take some pleasure in being nasty to their fellow workers, or sarcastic, or mean.

This is the dilemma facing a CEO or other top administrator who chooses to set up an open process of employee involvement. In an effort to make the forum open to all, without fear of reprisals for anything said, some people will take advantage of the situation and be nasty or otherwise inappropriate. If this gets out of hand, these kinds of attitudes can spread and poison the atmosphere for all.

Some people in my hospital have already asked me to take down the chat room because they have been offended by some things that have been said. For example, one person said, "Take this brainstorming session down. I am embarrassed to say I work with these people!!" Others have asked me to delete those kind of comments. I have refused to do either. My response to the above post was:

"Hey, it's a free country. Unfortunately people who are commenting anonymously sometimes say things that are ill conceived or mean. But the forum is still useful to those of us who are taking it seriously and trying to learn from one another. To take it down would let those who misbehave steal an opportunity from those of us who want to participate."

Also, I post a comment right after each nasty comment suggesting to the author that he or she is engaged in bad behavior, is insulting their fellow workers, or is otherwise undermining the spirit of openness and collaboration that we seek to foster.

Meanwhile, staff members, too, post their own comments encouraging better behavior. Here's a sample: "Before you scoff at an idea presented, think about how fortunate we are to have this forum in which to 'vent' and to present ideas. Most companies just make decisions regarding cutbacks and notify their employees once the decisions are made. We are being given a unique opportunity here to be part of the conversation and ultimately the solution. Be mature and show some respect to everyone that at least comes to the table with something."

All in all, I have been pleased and heartened by the response of our staff. Having worked at BIDMC for seven years, I am not at all surprised by their involvement and helpful ideas and their desire to support one another. To the bad eggs in the crowd, I offer a simple suggestion, "Please don't post anything that your mother would find objectionable!"

The backyard on a moonlit snowy night

Diabetes design contest

One of my blogging heroines, Amy Tenderich of Diabetes Mine, writes and asks for help publicizing the following contest:

Hi Paul,

This week we opened the 2009 DiabetesMine Design Challenge, a web-based competition calling for innovative design concepts (devices or web applications) that will improve life with diabetes.

This year, the contest is sponsored by the California HealthCare Foundation (CHCF), with a Grand Prize of $10,000. It’s also supported by global innovation firm IDEO and by Medgadget.com, the Internet journal of emerging medical technologies.

The contest is hosted here.

Here's the press release:

DiabetesMine™ Kicks Off 2009 Design Challenge;

Fostering Innovation to Improve Life with Diabetes

Sponsored by the non-profit California HealthCare Foundation, leading community website DiabetesMine™ offers $10,000 Grand Prize to best new creative tool that will transform life with diabetes

San Francisco, Calif., March 2, 2009 -- DiabetesMine™, a leading informational and community web site for people with diabetes, today announced kickoff of the 2009 DiabetesMine Design Challenge, a competition designed to foster innovation in diabetes design and encourage creative new tools that will improve life with diabetes.

This annual web-based competition is hosted at www.diabetesmine.com/designcontest, and is underwritten by the California HealthCare Foundation (CHCF), an independent philanthropy organization committed to improving the way health care is delivered and financed in California and beyond. It is also endorsed by Medgadget.com, the Internet journal of emerging medical technologies, and supported by the global design and innovation firm IDEO, with headquarters in Palo Alto, CA.

“CHCF is committed to improving the quality of care for patients with chronic conditions,” said Veenu Aulakh, senior program officer for the Foundation's Better Chronic Disease Care program. “The Web is becoming a major platform for patient interaction and improved self-care through increased access to relevant health information and support. We’re excited to support this interactive, web-based design contest fostering innovation in such a prevalent and challenging condition as diabetes.”

This competition is open to any individuals or organizations passionate about diabetes and product design – whether you're an enterprising patient or parent, a startup company, a design student, an independent developer or engineer, or a pharma R&D pro. Entries from participants under age 18 are also welcome, and will be judged in a separate category.

To help refine and realize their design concepts, three winners will be selected to receive the following prizes:

· $10,000 in cash for the Grand Prize winner;

- plus a mini-workshop with Health and Wellness experts at the global design and innovation firm IDEO;

- and one free access ticket to the “innovation incubator” Health 2.0 Conference planned for October 2009 in San Francisco, CA

· $5,000 cash for the “Most Creative Idea” category winner;

- plus a consulting session with IDEO design experts

· $2,000 cash for the winner of the Kids’ Category (under age 18)

(total cash prizes $17,000)

"We can’t overemphasize the impact of design innovation in the lives of people with diabetes. Desirable form factor, ease of use, and potential incorporation of diabetes tools into other devices – like cell phones – all have the potential to transform diabetes management and quality of life for millions of people,” said Aaron Kowalski, Research Director of the Artificial Pancreas Project at the Juvenile Diabetes Research Foundation (JDRF).

The Design Challenge concept was born in Spring 2007, when creator of DiabetesMine Amy Tenderich posted an Open Letter to Apple CEO Steve Jobs, calling for the gurus of consumer design to help revolutionize design of diabetes devices. In the weeks and months that followed, numerous individuals and organizations came forward with compelling new prototypes, designs, and ideas. These included new concepts for glucose meters, insulin pumps, lancing devices (for testing blood glucose), devices for transporting medical records or tracking glucose results, diabetes supply carry cases and more.

This year, a seven-member judging panel includes some highly influential individuals in healthcare and diabetes treatment:

§ Veenu Aulakh, senior program officer for the California HealthCare Foundation's Better Chronic Disease Care program, with deep experience in diabetes care

§ Michael Ostrovsky, MD, editor of Medgadget.com, the online journal of emerging medical technologies

§ Steven Edelman, MD, a distinguished endocrinologist living with Type 1 diabetes himself, and creator of the nationwide TCOYD (Taking Control of Your Diabetes) conference series

§ Robert Oringer, an entrepreneur and angel investor in the diabetes industry who pioneered private-label diabetes products such as lancets and glucose tablets (Robert also has two young sons with Type 1 diabetes)

§ Ross Jaffe, MD, a board-certified internist and eminent venture capitalist with Versant Ventures in Silicon Valley, leading investments in medical devices, drug delivery, and healthcare information systems companies

§ A senior designer with the global design and innovation firm IDEO, in their Heath and Wellness practice — which helped design Eli Lilly’s Kwikpen product and packaging for GlaxoSmithKlein’s Alli diet product

§ Amy Tenderich of DiabetesMine.com, blogger, author, patient advocate, Health 2.0 consultant, and contest creator

Submissions are accepted in the form of a 2-minute video to be uploaded to the DiabetesMine YouTube channel, or a 2-3 page written "elevator pitch" plus supporting graphics, also to be uploaded online. The deadline for entries is Friday, May 1st, 2009, at 11:59 pm Pacific time. Winners will be announced on Monday, May 18th, 2009.

"We look forward to all kinds of creativity. Good design can be applied to anything, even something as 'low-tech' as a special container for disposing of used glucose test strips. Let the innovation begin!" Tenderich said.

Town meetings @ BIDMC

Looking at these smiling people, you would never think that the topic of the day was possible layoffs, reduction of employee benefits, and other such matters. As promised in my message a couple of days ago, we held the first of a series of town meetings yesterday to explain our financial situation and to solicit ideas and suggestions from people as to how we might meet this year's budget gap.

Over 600 people joined in three quickly assembled sessions. And we will hold more next week, too.

Then, in a couple of weeks, I will send out another message listing the ideas that seem to be practical, legal, and implementable -- along with their budgetary impact -- and conduct a rough survey of our staff to see which ones they favor. Then, by April 1, we will decide what we are going to do and the schedule for doing it.

As expected, the response from the staff has been spectacular. People have a terrific sense of community and are quite willing to make sacrifices for the good of their fellow workers. (And, as you can see in the picture above, people are maintaining a good sense of humor, too.) I'm going to post some of their comments for you below so you can get a sense of the sentiment.

Beyond the general feeling, I was very, very pleased when I asked people if they agreed with my predisposition to protect our lower wage earners (e.g., transporters, housekeepers, food service people) from measures we take, even if it means that other people have to give up more of their salary and benefits. The response was overwhelmingly positive, as you can see in Brenda's and others' notes below.

In this era of sometimes cynical and sometimes selfish behavior, I was heartened by the response of our folks. They are kind people who view themselves as a family and who are approaching our hospital's financial problems with a true generosity of spirit. Here are some examples. First, from Brenda, a nurse in our neonatal intensive care unit:

Paul,
I attended today's 4pm town meeting and about halfway through the meeting, I found myself on the verge of tears. Not just because of how worried I am, and not because of how sad the situation makes me, but because of how overwhelmingly proud I feel to be a part of the BIDMC community.

I have worked in the NICU since November 2007, so I am pretty new to the hospital. I have worked in several different hospitals and I have never witnessed what I witnessed today. First you began by telling us how hard you were trying to avoid layoffs. Any CEO could say that. But what impressed me was the deeply human way you explained how difficult this process is. The fact that you are considering that many employees' spouses have already lost jobs, and that you know employees who lose jobs will have a very hard time finding new ones showed such compassion and respect that I was stunned. However, your request that we try to minimize the effect any cuts will have on the lowest-paid employees was what brought me to tears-- that and the loud applause you received after making that request.

I know the next few months will be extremely difficult for all of us. But it is so comforting to know that the people I work with are not just sitting back and letting things happen. After this afternoon's meeting, we had our own "post-town meeting meeting" to review what you had said, and to toss around suggestions. I know those little meetings are happening all over the medical center. I have never been prouder of the people I work with and the hospital I work for.

---
From Brian in finance:

First of all, I sincerely appreciate your honesty and openness. Thank you for that. It’s refreshing to see that in this day and age.

I am a new employee here, only being here three weeks. I wasn’t going to email you, but I felt that I just had to. I was laid off back in October from the hospital I worked at in Rhode Island. I collected unemployment until I got my job here.

Obviously, I want to keep this job. I’m sure I echo most people’s thoughts when I say that no one wants anyone else to be laid off, and we are all willing to do whatever is necessary to make sure that as few as possible actually lose their jobs.

I think the ideas on taking pay cuts, or maybe working one day a week less, can work. I stand behind whatever decisions you and the Senior Management team makes. Thank you for you candor, and please keep us all informed!

---
From Lindsay, a nurse:

I have been here at BIDMC for 10 years. I am a huge supporter of your leadership and your willingness to include all staff in your decision making. Our floor just had a staff meeting on Monday to discuss ways we could cut costs for our floor. We were all in agreement to find out if it was an option to eliminate the 3% pay raise, and our manager was going to look into this. So, that would be my vote as a first measure to save some money.

I look forward to attending your town hall meeting tomorrow to discuss other options if necessary. Thank you for including all members of BIDMC in making this hard decision.

---
From Carol, a nurse:

I am hoping people weigh in on some of your solutions, such as reducing future earned time accruals or forfeiting past accruals of earned time. I know I personally would be willing to forfeit some past accruals of earned time if it would prevent lay-offs.

---
From Julie, a technical assistant:

Your letter has tapped into what I have been thinking about for the last few weeks. It had occurred to me that perhaps forgoing one's annual raise would be helpful, and I was going to throw the idea out to you, but had not managed yet to put anything in writing. It was a tough idea to come up with, since I look forward to that raise every year, but if it would mean that we don't have to lay someone off, or reduce services, I would agree wholeheartedly to do so.

I think that you express what has been floating around in our collective unconscious; we look at what is going on in the world, and it is a small leap to see how our hospital is affected. I do think, though, that people at the lowest pay grades should not see any reduction in their raises.

---
From Kathleen, a nurse:

I think it is important to keep as many of us working as possible. I would forgo my 3 percent increase and give us a day of ET to help avoid layoffs. I am concerned about our coworkers who are making a lower wage. I'm sure you're aware that life has gotten more expensive. I hope there is a way that people who are on the lower end of the totem pole can still receive their increases.

---
From Catherine, a nurse:

I would be more than happy to forgo a pay raise and reduce my earned time if that would mean another person in the hospital could keep their job. I think this is a great idea and I hope my colleagues feel the same.

---
From Martha, a medical technician:

I am very sure that most of us in nuclear medicine would be willing to give up the 3% pay raise and also give up some of our earned time to prevent layoffs.

---
From Wilbert, a respiratory therapist:

One week of unpaid LOA, 3% of wage reduction, night and weekend differentials, temporary elimination of annual raise and bonuses, efficient work load and staffing all combined are 100 times better than laying off a single employee. Make a quick survey of these vs lay-off. This should tell us the best way to go about it.

---
From Bernice, an MRI technician:

I would rather take the loss of my yearly raise then see a fellow employee laid off.

---
And from Ediss, a program manager:

Thank you for this informative note and for the openness with which the issue is presented and being discussed. We held a brief department meeting this morning and everyone is very appreciative of your approach and the invitation to contribute ideas to inform decision making. I've encouraged everyone to write directly to you too to express their thanks and let you know their ideas.

So far, everyone feels that giving back earned time is the way to go--less painful than going a day without pay (like the City of Lynn apparently did) as you don't really feel the loss in your weekly paycheck. Staff are very committed to everyone feeling the pain a little and saving jobs where ever we can.

These are initial reactions. Hopefully we'll come up with additional cost-savings ideas to contribute to the overall effort but for now, a huge thank you from your grateful employees.

Wannabe and Wallaby on Greater Boston

I appeared on the local PBS television station last night on Emily Rooney's Greater Boston show to discuss the memo below. I was preceded by State Treasurer Tim Cahill, who is reported to be interested in running for Governor. I was followed by the young female visitor from Australia pictured here.

Update on the economy and its effect on BIDMC

Back in November, I wrote to our staff with an explanation of what the economic trends might mean for our hospital. Yesterday, I sent out a update. I print it below. As you can see, things have gotten worse.

So far, I have received notes from about 200 people with suggestions. Many appreciate the openness with which I have discussed our financial situation, and they also welcome the opportunity to offer ideas. I'll print some of those later.

Dear BIDMC,

I wrote you last fall about the state of the economy and measures that we were taking at BIDMC to deal with those general trends. In particular, I said:

"We plan to watch the numbers very, very carefully. Our CFO, Steve Fischer, will bring a monthly dashboard of revenue and cost variances to our Operations Council so that the Vice Presidents can solve problems early and aggressively when they appear. We will have the same discussion monthly with the Chiefs of Service. If we aren't hitting targets for revenue and expenses, we will act quickly to correct the situation. In line with our policy of transparency in so many areas, we will keep you up to date, as well, so that all people working here will know how things are going.

"You have probably read about layoffs in other hospitals in Massachusetts. A number of hospitals already find themselves in worse shape than us, and they have responded by reducing the number of staff. You have probably noticed that this is also true for many other types of businesses in the region. As of now, we do not think we will be forced to do that, and we will do our best to avoid that result. Many of us lived through the dark days of 2002, when I eliminated a number of jobs, and no one wants to repeat that experience."

Well, as you can see from general trends in the economy and by watching the actions of other hospitals, the situation has gotten worse. For BIDMC, our hoped-for 2% FY09 operating margin (about $18 million) has disappeared. The state has reduced Medicaid payments by over $7 million, our major insurer is paying us less than we had hoped, and research funding has also fallen short by several million dollars. In addition, patient volumes are substantially lower than budgeted as people in the community defer or forego medical visits and treatments.

Right now, at best, we can break even for the year if patient volumes return to budgeted levels. However, if they stay at current levels, we will face an operating loss of up to $20 million. This is the contingency for which we must prepare, or else we will have insufficient funds to invest in the buildings, plant, and equipment needed.

We have taken steps to date to reduce expenditures. For example, many of you have probably noticed that we have slowed down hiring dramatically, examining each and every vacancy before refilling positions.

Now, sadly, we have to crank up the expense reduction. We began the year with a level of staffing that assumed a larger number of patients. With the reduction in patient volume and with a fairly dramatic reduction in length-of-stay for those patients who do come here, we are overstaffed. We need to make some hard decisions by April 1, as we are already halfway through the fiscal year, to start reversing the downward trend. We also need to do so well in advance of FY2010, which promises to be an even more difficult year. To be prudent about financial planning for this year, we aim to generate savings of at least $20 million for the rest of the fiscal year.

Part of the solution to this problem will be to lay off people. I'm not sure how many yet, and I am hoping you can help me figure out how to minimize the number by using more creative and less disruptive ways to solve the problem. I am going to hold some town meetings in the next several days to get your thoughts about alternative concepts. I will lay out some ideas here, so you can be thinking about them. You can write back now, or you can tell me in person later. Perhaps you will want to discuss them with your colleagues. Perhaps you have better ideas to suggest. We'll soon set up an electronic chat room, too, to permit people to share their thoughts more broadly with the community.

Our focus has to be on reduction of personnel costs, our major operating expense. Here are some ideas to start the discussion: Eliminate the 3% pay raise for people who would ordinarily receive it starting April 1. (To compensate, in the future, new raises could start with the people who have anniversary dates of April 1 and after.). Reduce future earned time accruals by one or two days per year. Forfeit one or two days of past accruals of earned time. Permit certain floors or units to avoid layoffs by voluntarily taking pay cuts equivalent to the dollars that would be saved by the layoffs in that floor or unit. Ask people to take furloughs, unpaid leaves of absence for several days.

But the bottom line is the bottom line. If you don't like these ideas, please help us come up with others.

The senior managers of the hospital have recognized their personal responsibility to help with this problem. The senior vice presidents, vice presidents, and chief operating officer have been asked to take voluntary 5% pay reductions, and I have eliminated all of their bonuses for 2009, a total potential pay reduction of 15% to 25%. I am personally taking a 10% salary reduction and will forego my bonus opportunity for this year, a total potential pay reduction of 30%.

For the next step in answering your questions and receiving your ideas, I have scheduled three town hall sessions for tomorrow, Friday, March 6 -- at 8am in the Sherman lecture hall, noon in the Leventhal conference Room, and 4pm in the Sherman lecture hall. If you can't make it, don't worry. We will hold other sessions in the coming weeks, on campus and also at Renaissance, 109 Brookline, and Lexington, Chelsea, and Bowdoin Street.

Those who were here in the late 1990's and early 2000's know that we have the tenacity and creativity to pull through hard times. This recession is different in scope and shape from that period, and it will present us with new challenges. If it is any solace to you, we are far from alone. Here's a report with excerpts from the LA Times:

Two new analyses show that the "economic decline is continuing to ravage the nation's hospitals, with half of them operating in the red, and many planning service and staffing cuts." The Times explained that "hospitals are ailing because of a number of problems hitting in close succession." The problems include "investment incomes" plummeting, while more people "put off elective procedures and insurers" tighten "their grip on the length of hospital stays they cover." According to the new data, "an unprecedented 50 percent of the nation's hospitals appear to be losing money." The bottom 25 percent of hospitals "posted margins below minus seven percent, or seven percent worse than the break-even point, while the top performers' margins exceeded 4.5 percent. Even operators of the most robust hospitals are bracing for another difficult year as the effects of layoffs and employer cuts in health-insurance benefits take hold." A second study found that "44 percent of hospitals have seen declines in surgeries, with hip procedures showing the steepest drop-off at 45 percent." This has caused "47 percent of the hospitals surveyed expect to make staff cuts, and 69 percent plan to cancel or delay equipment purchases."

I am confident that we will apply our usual spirit of collaboration and teamwork to this current set of problems. I look forward to your suggestions and thoughts.

Sincerely,

Paul

Honoring Dr. Douglas Pleskow

About ten years ago, two women with pancreatic disease happened to meet, discussed the lack of scientific knowledge about their disease, and decided to establish the National Pancreas Foundation to support research in this arena and to provide support to pancreatic patients and their loved ones. In the time since, the foundation has funded over $1.5 million in research, organized support groups, and engaged in other fine programs in pursuit of that mission.

Each year, the NPF holds a gala dinner and recognizes a person who has helped in this field. Last night, the honoree was Dr. Douglas Pleskow. Doug started practicing at New England Deaconess Hospital in 1987 (prior to its merger with Beth Israel Hospital in 1996). He was named Co-Director of Gastrointestinal Endoscopy in 1995.

Here's a summary from the program book:

Doug sees patients with complex gastrointestinal problems related to the pancreaticobiliary tree and Barrett’s esophagus. A major part of his practice involves patients that require therapeutic endoscopic procedures. An expert in all aspects of biliary endoscopy and endoscopic ultrasound, he is also an expert in all types of pancreatic diseases. Dr. Pleskow’s major research interests have been the study of serologic markers in pancreatic disease, therapeutic pancreaticobiliary endoscopy and endoscopic ultrasound. He has pioneered the endoscopic placement of gold markers in patients with pancreaticobiliary malignancy to facilitate Cyberknife therapy. He and his colleagues have worked closely on the endoscopic treatment of Gastroesophageal Reflux Disease (GERD) and Barrett’s esophagus.

Beyond his practice Dr. Pleskow is an active and influential member of the NPF board and its Executive Committee. He has previously served as Executive Director and currently presides over the Scientific Advisory Committee and sits on the Grant Review Council.

I had the privilege of introducing Doug last night and presenting his award to him. I ended the presentation with the following quote from one of his patients:

“You are introducing a great man tonight . . . a rare combination of professional expert, highly competent physician, compassionate care giver, and friend. A man who -- seeing the dearth of knowledge and tools to improve the treatment of pancreas diseases -- committed his time and talent to help fill that void. And with that, you can add another quality that makes Doug even more rare . . . leadership. I am blessed and fortunate to be in his care.”

We, too, are blessed and fortunate to have a person of Doug's ability and character at BIDMC and congratulate him on this honor.

He iti rā, he iti māpihi pounamu

A reader from New Zealand writes to inform me of the second annual report by the New Zealand health service on serious and sentinel events in that country's hospitals. Here it is.

I was taken by some quotes from Patrick Snedden, Chair of the Quality Improvement Committee:

Sometimes, despite people’s best efforts, things go wrong. When they do, we need to be open with patients and their families, do what we can to correct the situation and we need to support the clinicians and health professionals involved.

We also need to investigate impartially, learn what happened and – most of all –we need to share the information try to stop it happening again.

Hospitals have always collected this data. Last year we learned more about the value of sharing lessons learned with other DHBs (District Health Boards) and have therefore started to introduce a new, national incident management framework to record the incidents and provide detailed summaries of outcomes and lessons learned.

Our aim is to improve safety by encouraging open and transparent reporting of events when something goes wrong. What we’re learning is being translated to system and process improvements in hospitals to reduce the risk of these events.

We have good, safe hospitals staffed by highly skilled people that provide a good quality of care – this is about making it even better.

I was also struck by the Maori saying at the top of the report, which I have used for the title of this posting. It means: A small contribution can be as valuable as a precious stone.

PPE is not for me

Back in December, I announced a new focus of our BIDMC SPIRIT program, one directed to solving the problem of employee injuries. I had noticed that we had hundreds of injuries per year, and it occurred to me that we might be able to reduce those using the same tools and approaches we have used so effectively elsewhere.

We set up a reporting system, and we now have a post on our company intranet portal for all to see how many injuries have occurred and what the major categories are. You can see a sample above. We have also tried to adopt the root-cause problem solving methodology to the incidents.

I want to talk about one category here today because we are struggling a bit with how to solve it, and I seek the advice of others among you who may have already done so.

It's that last category above -- exposure to blood and fluids -- which you can see is a persistent problem. In theory, people should wear personal protective equipment (PPE) when there is a chance they will be exposed to blood and other bodily fluids that might fly through the air or otherwise reach them. But this often does not happen. There might be a variety of causes -- improper training, complacency, lack of proximity of equipment when needed, or even a lack of definition of when it is needed. We are currently reviewing all of these factors. If anyone out there has figured out how to ameliorate this problem in your hospital, will you please post your thoughts and suggestions?

Strength of a woman

A note from Dr. Hope Ricciotti, our residency program director in obstetrics and gynecology:

Our extraordinary OB/GYN Chief Resident Jennifer Scott recently traveled to the Democratic Republic of Congo with the Harvard Humanitarian Initiative. There, war has taken the form of sexual violence against women. One bright spot of hope is Panzi Hospital, which has been on the front page of the New York Times for their work in healing. Jen has been working with this group for several years. The below link to a musical slide show is quite incredible, and I thought you'd like to see what our incredible house staff do in their "spare" time.

And the note from Jen to Hope:

I thought you would enjoy seeing photos from our recent trip to Panzi. This is a slideshow created by the photographer from the Harvard Media Office. It is set to a song that was played everywhere in Bukavu while we were there. The photos are beautiful and moving and capture so much about 'the strength of a woman'. Thanks again for your support of this work.

Here's the link.

Congratulations, Dr. Gottlieb

Congratulations to Dr. Gary Gottlieb on his appointment as the next CEO of Partners HealthCare System, the largest health care delivery system in Massachusetts. Gary has been serving for several years as CEO of Brigham and Women's Hospital, one of the two (with MGH) PHS flagship hospitals. He is a warm, thoughtful, humorous, and intelligent person, doctor, and administrator, and he is an excellent choice for this job.

Because of its size and prestige in the Massachusetts health care environment, PHS carries special obligations. Also, that very presence makes PHS the lightening rod for criticism of the current health care system. Finally, because of its market power, PHS draws its own special set of commentary in Massachusetts.

The PHS hospitals are competitors of BIDMC, but, as I have explained elsewhere, we are also part of an important cooperative educational and research network that produces great value for Boston and the world. (Here are two examples.)

Because of that relationship, and because the health of PHS is a bellwether for the status of the medical system in the region, we at BIDMC have an overriding interest in the success of the Partners hospitals. That I have made this statement will come as a shock to the people in the PHS hospitals who listen to rumors about me rather than read what I actually say here, but let me expand on the thought with some examples.

First, PHS is the major regional advocate in Washington, DC for matters relating to academic medicine. Whether the topic is research funding at NIH, the structure of graduate medical education, or other general policy matters, PHS is the only Massachusetts hospital system with the resources to make a persuasive and consistent case before Congress and the Executive branch. Gary will be catapulted in his new role to the national scene, and I am confident he will carry out this task very well.

Second, if there is any organization in the state that has the potential to demonstrate the potential for an integrated health care delivery system, it is PHS. But, it will come as no surprise to participants in that system that this has not yet happened. The long-standing rivalry between the two flagship hospitals has meant that rationalization of tertiary and quaternary clinical service between the Brigham and the MGH has often been deferred. Previous Partners CEOs have focused their efforts on integration of back-office and other business aspects of the system, leaving clinical integration essentially untouched. Gary will face an interesting and important choice as to how and if he will address this unachieved potential benefit to the region. If the Partners system first sets an internal example, it might then be possible to achieve a broader rationalization of care in cooperation with the other academic medical centers (BIDMC, Boston Medical Center, and Tufts). We all need to garner these economies to control costs in the over-served Boston marketplace.

Third, my favorite topic. The Partners hospitals are full of well intentioned, dedicated people. But there has not been a corporate public commitment to reduction of harm and to transparency of clinical outcomes that could help build broad public confidence in the quality and safety of patient care -- and with this a confidence that we are also attempting to control costs. I would love it if Gary were in the position of challenging me and the other hospital leaders in this arena, rather than vice versa. Ironically, some of the world experts in these matters are faculty members in his hospitals. The Partners system should be a world leader in the science of health care delivery, along with the fields in which it already holds prominence.

Fourth, like all of the Boston hospitals, the Partners hospitals face the promise made by the SEIU that it intends to organize its health care workers. To date, Partners has walked a tightrope -- giving the impression to politicians and others of congeniality with this union, while actually not agreeing to any of the union's proposals. The day of reckoning will surely come on this issue, and Gary will have to decide whether to wait for the union to decide on the terms of public engagement or whether to help frame the issue in the public eye. His decision will have ramifications for the entire industry.