Millions of dollars are being saved and/or trimmed behind the scenes to help area hospitals survive the recession. And if all goes well, patients won’t notice any difference.
These measures aren’t as flashy as postponing major building projects, and they don’t pack the emotional heft of layoffs, but hospital administrators say they’re saving money, one glove-box contract at a time.
Some hospitals — such as Hanover Hospital, Springettsbury Township-based Memorial Hospital and Harrisburg’s PinnacleHealth System — have renegotiated vendor contracts.
For example, renegotiated contracts for hip and knee implants are saving the hospital a few hundred thousand dollars per year, said George Kyriacou, Hanover Hospital’s chief executive officer and president.
Hanover and Penn State Milton S. Hershey Medical Center have initiated programs to gather cost-saving ideas from staff members.
One idea that’s come out of this process at Hanover — a recycling program — even has begun to generate some revenue, said Pat Saunders, vice president of nursing.
Hershey expects its version of the program will save $7.5 million over three years, said Jim Rohacek, administrator of support services integration at the Derry Township-based institution.
Hershey also has been pursuing product standardization to trim expenses: for example, purchasing all of the same type of gloves helps hospital negotiate better prices, he said.
“It’s really transparent to the patients,” Rohacek said. “They wouldn’t notice anything different. The products are all quality products, and we save a lot of money on them.”
Staffing patterns and personnel have come under greater scrutiny at some local hospitals.
Hanover is authorizing overtime more sparingly, has eliminated its use of agencies and has decided to postpone filling or eliminate eight or nine open positions, Kyriacou said. Some people who had worked at the hospital under the auspices of an agency now have permanent positions with the hospital.
Hanover also has partnered with Penn State to bring educational opportunities to its staff instead of paying to send them farther away, largely through the use of distance learning.
Memorial Hospital has slashed its use of consultants, said Richard Imbimbo, chief financial officer at the Springettsbury Township-based facility.
Thanks to a collection of cost-saving initiatives, Memorial Hospital is poised to hit its revised fiscal targets for 2009, Imbimbo said. Hospital management developed the revised targets in the late fall when it became apparent the downturn would be sustained, he said.
Combined with a series of salary freezes and reductions, the measures save the hospital about $500,000 per month, Imbimbo said. The hospital also postponed major capital expenditures unless urgently needed, cut back on travel and reduced its advertising budget, he said.
Some positive indicators have begun to surface in the economy, but the hospital remains hunkered down to wait out the squall.
“I still think we’re vulnerable for least six to nine months,” Imbimbo said.
Some hospitals have existing programs that are continuing to quietly save them dollars.
About two years ago, Hershey began working with Minnesota-based Universal Hospital Services (UHS) to manage its equipment inventory.
The program has financial as well as practical benefits, Rohacek said.
“Over the years we had problems managing movable medical equipment in our institution — problems like, nurses couldn’t find equipment and, when they found it, it wasn’t clean,” he said.
Under the terms of the agreement, UHS owns certain types of equipment, such as infusion pumps and crash carts, and is responsible for its storage, maintenance, tracking and replacement.
It’s saved the hospital $3.6 million it would have had to spend to replace or upgrade equipment and $300,000 per year because it frees up staff from equipment troubleshooting and maintenance, Rohacek said.
Nursing satisfaction also has shot up since the partnership began, he said.
The program is one that will continue with or without recession, Rohacek said.
Some cost-saving measures — or at least the spirit in which they were implemented — might also endure beyond the downturn, hospital staff members said.
“Everyone’s much more cognizant of what they’re spending — they now watch every dollar,” Imbimbo said. “That’s a healthy thing, and something I hope that will continue when things pick back up economically.”o