12.12.2011 Back to News

Forum Feedback: Cost Savings Continue

John M. Fraser
President & CEO
Methodist Health System

The following questions were submitted to Forum Feedback in response to the recent Online Forum, “Cost Savings Continue: Thank You for Your Support.” I encourage you to submit questions and comments so senior leadership can address topics of broad interest to employees.

Holiday Impact

A sampling of feedback to the announcement that Methodist Health System will not provide holiday gift cards to employees this year follows. We are continuing to celebrate the season with on-site holiday buffets or snacks for employees.

  • I think it's unfortunate that the cost cutting was passed on to the hardworking employees of Methodist Health System during a busy holiday season.
  • I want to express my support for the choice to drop the gift cards and keep the holiday buffets for each department!
  • If I had a choice between food and the bonus [gift card], I surely would pick the bonus.
  • The holiday gathering is appreciated. I love the nurturing of relationships that happens during that time.

Thank you for sharing your points of view. I assure you that we deeply appreciate our employees’ hard work and loyalty, and I am sorry for the disappointment or discomfort that comes with the elimination of holiday gift cards. This decision, based on fiscal reality, was not made lightly. We are moving forward, doing what must be done to protect jobs and ensure the long-term success of the organization. In making an essential cut in holiday spending for employees, we knew that no solution could please everyone. The majority of employee feedback we are receiving is positive, and your support is much appreciated. We hope that employees are joining in the camaraderie of gathering together at holiday receptions.

Cost-Saving Priorities & Administrative Cuts

Q: Everything I have seen and heard thus far for cutbacks has pertained to those who are in direct patient care. I would think that the focus would be on cuts in non-direct patient care staff. What cuts has administration implemented for themselves?

A: I appreciate your comment and the opportunity to address possible misunderstandings about how we will attain the essential cost savings we need to remain successful in a difficult economy and changing health care industry. Our first priorities remain patient care and protection of employee jobs and benefits for those who make the Meaning of Care possible throughout Methodist Health System.

Our greatest cost savings are not related to the delivery of direct patient care. In fact, we are increasing our investment of dollars in patient care areas. A few examples:

  • Cerner Evolution and other software systems for "meaningful use" of information technology to empower physicians and care teams throughout Methodist Health System to improve patient care and safety, clinical outcomes and efficiency.
  • New telemetry system at Jennie Edmundson Hospital.
  • New surgical suites, electro-physiology lab and patient beds at Methodist Hospital.

Regarding staffing, the overwhelming majority of staffing changes we have made are in non-patient care areas, primarily through attrition and decisions not to replace departing employees.

Regarding administrative cuts, here are a few recent administrative cost savings:

  • Freeze on administrative pay increases (started in 2010).
  • Reduction of non-essential travel and training (started in 2010).
  • Increase in encouraged or required PTO to reduce salary liability on our balance sheet.
  • Freeze on filling new or open positions unless mission-critical.
  • Distribution of additional VP responsibilities in place of refilling two executive positions.
  • Cuts in consulting and legal fees, office supplies, professional memberships, publication subscriptions.

We have begun the work we need to attain dramatic cost savings, starting with deep cuts in administrative areas and a strong focus on reducing non-labor expenses to minimize impact on our employees. Our Value Analysis Teams have worked to standardize and manage supply inventories for deeper discounts, greater efficiency and elimination of waste and duplication. Already, VAT teams have slashed non-salary expenses by $8 million.

We still have a long road ahead. Smart growth, smarter processes, prudent expense management, cash conservation and collaboration have been and will continue to be essential to our success. Every member of the Methodist family should be looking for ways to attain new cost savings, greater efficiency, higher quality and improved customer service. Submit suggestions to your supervisor or to ForumFeedback@nmhs.org.

Pay Freeze Through 2011

Q: Please let us know if we will receive a pay raise this year... so that we are able to adjust our lives accordingly.

A: Thank you for sharing your question and concerns. Methodist Health System affiliates are not planning any salary increases or bonuses through the end of 2011. We will continue to evaluate the possibility of salary increases after the first of the year.

The decision to place a hold on pay increases is based on current fiscal realities. As outlined in earlier Online Forums and as supervisors should continue to discuss with all team members, we are moving forward, doing what must be done to protect jobs and ensure the long-term success of the organization. The challenges facing us (and the entire health care industry) require real change, dramatic cost savings, and, yes, greater teamwork and sacrifice. Business as usual is not an option.

A combination of factors brought us to this point, including an economy in recession, health care reform, deep cuts in reimbursement and the ramp-up of new facilities that are strategic investments in Methodist’s future. The Health System as a whole is currently underperforming compared to our budget goals, and we are working to better control expenses. The cost savings initiatives we are implementing should position us to turn this difficult corner. Our success depends upon living within our means and doing the right thing for our patients and organization as a whole.

We greatly value and appreciate our employees, but the hard truth is that raises are not possible at this time. Instead of raises and holiday gift cards, we are conserving resources to protect the jobs of our employees.

You might be interested to know that we constantly monitor salary data to remain competitive, and our salaries are competitive in our market. We will continue to monitor market salary data and factor that information into future pay raise decisions

Thank you for your understanding and support.

Supervisors, please post this Online Forum for employees with limited computer access and be sure to discuss cost-saving goals and progress with your staff.

We welcome your feedback. To submit a comment, question or cost-saving suggestion to Online Forum, email ForumFeedback@nmhs.org or use Employee Connection’s "Submit a News Idea" online form. Your feedback will be forwarded to the appropriate administrator with your name for a direct response, unless you ask to remain anonymous. Answers to questions or comments of broad impact to employees may be reported in a future Online Forum. Employees’ names do not appear when Forum Feedback questions and answers are posted online.