Medical Center studies more cuts
Beleaguered agency faces $86 million deficit
By Rebecca Vesely, STAFF WRITER, The Oakland Tribune
Wednesday, November 19, 2003

Facing a budget deficit that has nearly doubled since the last official estimate in July -- to $85.6 million -- the Alameda County Medical Center leadership laid out potential reductions Tuesday that slice to the bone of the health care system for the area's poor.

"Whatever we do, we know there's going to be some cuts, we know that but we have no choice," said Ilene Weinreb, president of the Board of Trustees for the medical center, which includes Highland and Fairmont hospitals, John George Psychiatric Pavilion and three outpatient clinics in Oakland, Hayward and Newark.

Among the proposals put forth by the Board of Trustees to close the gaping deficit are shutting down obstetric services at Highland Hospital and closing that hospital's 37-bed telemetry ward. John George Psychiatric Pavilion would close a 21-bed ward and Fairmont Hospital would shutter a 32-bed unit in its skilled nursing facility.

Closing all these services would save an estimated $8.5 million a year.

Also under consideration is a plan to reduce hours at all outpatient clinics to four days a week.

Perhaps most contentious is a plan to close outpatient specialty clinics, including outpatient cancer and HIV treatment, and services such as orthopedics. This would save about $1.2 million a year.

"This is very unpalatable to people," said the medical center's interim Chief Financial Officer Robert Strawn, who outlined the proposals.

Other proposed cuts run the gamut -- from shutting down the cafeteria at Highland Hospital, a $1.1 million-a-year losing operation, to freezing purchases of computers to reducing access to patient charts.

All departments were required to come up with a 17 percent reduction. though some departments will not face cuts that deep.

Staff reductions would total 176 full-time positions -- between layoffs, attrition and not filling open positions. These cuts would be in engineering, meaning longer lead times in hospital repairs and maintenance, as well as in administration and public relations and other departments. About $1 million has already been cut by consolidating some executive staff positions and eliminating others.

Physician contracts would be adjusted, saving about $1.4 million a year. The medical center would attempt to hire more nurses, thus saving an estimated $10.9 million over the next nine months in contract or registry nurse fees, Strawn said.

Closing all of these services would still leave a $33 million deficit, Strawn said, and would essentially transform the medical center into a primary and emergency care center, instead of a comprehensive medical network.

Efton Hall, Jr., the medical center's interim CEO who has been on the job for just little over a month, said cutting expenses isn't enough.

He called for revenue enhancements of $17.1 million, largely through drawing paying patients from other hospitals.

"We need to make our name a household name, get people to use our product," Hall said, while quickly admitting that there's a "huge gap" to achieving this.

Between the revenue enhancements and all the cuts, the medical center would have a $53 million budget reduction.

The real issue in these proposed cuts is whether they would ultimately cost the medical center more in lost revenue from patients who would no longer use the facility. In July, the medical center closed two outpatient clinics in downtown Oakland and San Leandro.

For instance, Trustee Joe Phan said, closing outpatient clinics one day a week could mean lost revenue from patients and no cost savings on overhead. "It would impact wait times and move in the wrong direction in terms of customer satisfaction," he said. "However, we've got an $86 million problem and something has to be cut."

Not having quick access to patient records and charts could also adversely impact the medical center, because these are important to keep up with state and federal quality reviews.

"I beg you to keep quality and safety as your north star," said Mary Ferguson, administrative director for quality and compliance.

Steve Thomas, coordinator for Highland's trauma center, told the board of trustees that "closing units doesn't make sense when patients are stacked up in the ER."

Phan said the benefit of making these cuts now is that it would close the deficit for the next several months. "To me, that is a very important position," he said. "It means we don't need any more money from the county and aren't under pressure to cut more."

In light of the medical center's increasingly difficult fiscal problems, the county Board of Supervisors is considering floating a half-cent sales tax on the March 2004 ballot. The tax would raise about $90 million a year for health care in the county, of which the majority would go to the medical center. The measure would require two-thirds approval from the voters.

The supervisors will vote on the language for the ballot initiative on Nov. 25 and Dec. 2.

Hall said he plans to meet with labor groups, physicians and department heads over the next few weeks to get input on the proposed cuts. The Board of Trustees will approve a final budget in early December.

"The size of the problem requires that we bring the whole team along in the process," Hall said.