March 12, 2013

Frequently asked questions about VUMC's economic repositioning

• What effect will the new health care laws and sequestration have on VUMC?
The impact on our revenue streams over the next 18 months will be at least $80 million, and additional reductions are likely. Through your efforts over the past year, we have successfully reduced our expenses by nearly $40 million in preparation for these events. The recently announced effort to remove another $50 million from our expense base is prudent given the challenges and uncertainty of our federal revenue streams.

• What changes might VUMC be contemplating in response to these revenue decreases?
First, we are looking at all opportunities to reduce overhead costs, including integration of administrative support functions across operating units for cost savings and improved efficiency. Second, in the health system we are focusing on a number of areas where we have the potential to improve productivity and revenue by improving workflow and charge capture activities. These include efforts to best manage inpatient stays, extend outpatient clinic capacity, reduce outpatient clinic wait times and improve documentation relating to the care we provide.

• What is VUMC’s position on Medicaid/TennCare expansion in Tennessee?
Vanderbilt is the largest provider of uninsured care in the region and performs more than half of the uninsured care in Davidson County. We have been actively involved in shaping a favorable policy for TennCare expansion in Tennessee in order to assure our state’s citizens are provided better access to health care coverage. Many of these patients already receive care in our emergency rooms at times of crisis. Due to lack of insurance these patients receive little preventative care and therefore experience long-term complications and ultimately incur greater health care expenses.

• If Medicaid/TennCare expansion happens, what impact will it have here?
The expansion of Medicaid will mean as many as 20,000 new jobs for the citizens of Tennessee. In combination with other legislation, TennCare expansion will provide almost two-thirds of the nearly 1 million uninsured Tennessee residents with insurance and access to care while providing significant budgetary relief to the state’s safety net hospitals, including Vanderbilt.

• What does VUMC plan to avoid in response to these conditions?
We are a people-focused culture. As such, we are focusing on improving efficiency, productivity and reducing overhead costs to avoid or minimize workforce reductions. At the same time, we intend to protect and invest in those programs core to our missions in patient care, research and education, while downsizing or eliminating programs that may not be essential to our future.

• Will there be layoffs in VUMC?
We are striving to minimize reductions to our workforce despite the economic circumstances of health care and research. In areas where it is inevitable that funding for positions will end, we will work diligently to identify other opportunities for employees as we seek to retain our talented staff. While we cannot guarantee there will be no changes in employment, the very minimal workforce reductions we experienced during the recession of 2008-2009 are strong evidence of our commitment to the security of our employees.

• Will there be compensation reductions as a result of sequestration?
Our goal is to identify the vast majority of the cost savings needed through the measures outlined above and not through compensation reduction. Based upon what we know today, our plan is to continue to provide merit-based compensation increases and market adjustments as needed to ensure VUMC salaries remain competitive in the local, regional and national marketplace.

• Will the reductions in federal health care and research revenue impact benefits?
The economic circumstances have no immediate impact on Vanderbilt benefits, but we are continuously reviewing our benefit programs for the best value.

• How is VUMC handling decreased research funding?
The research enterprise, like the clinical enterprise, is integrating administrative core functions to save costs. In addition, fewer staff research positions will be filled over the coming year due to reductions in funding on existing NIH grants. In some cases, faculty will be unable to renew NIH awards given the reduction in overall numbers of grants available. Wherever possible, we are seeking to fill open positions on new grants with individuals already at VUMC and who are searching for positions due to grants being discontinued. Reductions in the amount of funding on individual grants may also make the original aims/scope of work infeasible over the time period of the award. We will support investigators in renegotiating these expectations with federal agencies.

• Will the bridge funding program, supporting periods when faculty are experiencing difficulty during the competing renewal of a NIH grant, continue?
The bridge funding program is a vital resource for our funded investigators and will continue to support faculty during this challenging time for federal funding. In order to extend these resources to as many investigators as possible, we are looking at modifications to the program that could limit the amount of annual support while allowing larger numbers of faculty to receive funds.

• What will be the impact of these economic conditions on professional or graduate education programs at VUMC? Will there be any changes in scholarship support?
We are committed to those students and trainees who are here and in good standing in their training and educational programs. All scholarship levels will be maintained. Chairs, deans and directors of graduate study are working to assess target matriculant numbers for the coming year. Like our peer institutions, for the fall of 2013 we anticipate making modest reductions in the number of M.D., resident and Ph.D. training positions due to the recent reductions in research funding and given that health care educational programs, both here and across the United States, are supported by federal clinical enterprise revenues.

• We understand we have to cut expenses, yet we see the Medical Center investing in a health care network.
The Vanderbilt Health Affiliate Network (VHAN) is a state and regional effort led by VUMC to create a network of high quality, not-for-profit hospitals and associated clinicians to provide care in a more integrated and cost-effective manner. Our model is one of affiliation, not ownership, allowing VHAN to grow at very low cost. Ongoing changes in reimbursement methodology from both federal and commercial payors require us to achieve objective improvements in health quality across large populations of patients, making the formation of an integrated health care network essential to our future.

• What does a selected hiring freeze really mean?
For the next four months we will not hire into open positions in order to reduce VUMC-wide salary expenses. “Selected” indicates the freeze applies to all staff positions, posted or in recruitment, except for individuals who perform direct patient care and which has been reauthorized by an entity leader. If you are unsure whether the position you are concerned about is included in the freeze, please contact your entity leader. For positions funded by grants, and if there is no opportunity to fill the position from within VUMC, recruiting efforts may continue but the date of hire must be delayed until July 1.

• What will happen to candidates already in discussions with VUMC for posted positions?
Some posted positions may be kept active by working with candidates to negotiate start dates after July 1. We recognize that in some cases candidates are looking at competing offers and unfortunately may not be able to accommodate a delay. Most staff recruitment efforts should be delayed until July 1.

• Can an employee be hired now into a budgeted position, effective July 1?
This may be permitted, but all new hires will require approval through your entity’s position approval process. Entity leaders will work with you to ensure the job function cannot be filled through an existing VUMC resource.

• What if we have already made an offer to a person, effective prior to July 1?
All offers in writing with the approval of entity leadership will be honored.

• Will faculty recruiting be impacted?
Faculty recruitment generally occurs over 6-12 month periods. We do not anticipate the current hiring freeze will significantly impact faculty recruiting. Where possible, department chairs are asked to indicate start dates for new faculty hires to begin after July 1.

• Do the actions described above impact start-up package commitments to new faculty?
No, we stand firmly behind our commitments to recruited faculty. In some cases, the rate and pace of spending from startup packages may require adjustment. As always, faculty members will be supported by research leadership, including center directors and department chairs to make adjustments when needed.

• What can I do to help?

• Support efforts to integrate and consolidate administrative support functions, with a view toward reducing overhead and administrative costs.
• Where possible, support the addition of sessions to clinic schedules and patients to existing sessions if there are openings. Given available capacity, we hope to increase outpatient clinic activity across the VUMC system by 5 percent.
• Assist with enhancing documentation of care. If contacted by our utilization management staff, please respond as quickly as possible.
• Utilization of hospital beds at Vanderbilt has never been higher while demand for our inpatient services continues to grow. As such, your support of efforts to best manage inpatient length-of-stay in safe and effective ways will have an increasing impact on our ability to serve more patients in need of our unique services while safeguarding our financial status.
• Support MEOC, the Medical Center Economic Outcomes Committee, in their efforts to standardize and reduce supply costs in our perioperative and procedural areas. We also appreciate your support of other ongoing standardization efforts, such as physician equipment preferences for the operating rooms.
• Actively consider and recommend redesign of workflow in all areas to gain efficiency and reduce the need to expand staff.
• Share additional cost-saving ideas with your entity leadership
• Communicate:

— Listen to the questions and concerns of your staff
  — Share staff feedback with entity leaders and your respective HR consultants
  — Seek their constructive ideas