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UVMC Initiates Expense Reductions

Upper Valley Medical Center this week announced implementation of a significant phase of a cost reduction program begun earlier this year.  In action that impacted staff and programs across the health system and within the hospital, UVMC eliminated positions, reduced hours and modified compensation policies along with other budget reductions. 

“Health care is facing unprecedented challenges from economic pressures that many other businesses have been experiencing over the past year.  We have been hit hard this year.  It is clear after the first quarter that initial 2009 expense reductions will not be enough for us to maintain financial stability for the year,” said Michael J. Maiberger, UVMC President and CEO. 

He cited the following measures as part of a continuing expense reduction effort:    

  • Workforce reductions have been made including elimination of 46 open positions and 20 filled positions.  The reductions included both management and staff positions.  Hours have been reduced in a number of other positions, along with restructuring of some staffs to gain further efficiencies.  The reductions are primarily in non-patient care areas, in keeping with UVMC’s ongoing commitment to maintain the highest quality care and service for patients.    
  • Management wage increases have been eliminated for 2009.  Wages were frozen earlier this year for top leadership in the Premier Health Partners (PHP) system.  General wage increases for staff and other compensation policies continue to be evaluated.     
  • All capital expenditures not immediately essential for patient safety are being delayed or placed on hold. 
  • Curtailment of travel and overtime expenses, as well as other expense reductions initiated earlier this year continues.  All programs and services are being evaluated for further efficiencies. 

UVMC’s current phase of expense reductions is designed to reduce expenses by approximately $5 million at this time. 

“Knowing we face ongoing volatility in volumes and reimbursement, as well as other looming financial pressures, we will continue to closely evaluate our progress throughout the year and will implement other expense reduction measures in future phases if needed,” Maiberger said. 

“Our main objectives are to maintain the quality of care and services provided to our patients and to preserve jobs,” he stressed.  “We have a wonderful team.  We value each and every team member and are saddened to have to reduce our workforce.  No business decision is more difficult.”    

Maiberger said some of the major challenges currently facing UVMC today are:

  • UVMC’s charity and uncompensated care expenses have reached a record high and continue to grow.  This is largely due to the current economy, unemployment rate, and subsequent rising rate of uninsured/underinsured individuals in our region.   
  • As the number of uninsured/underinsured climbs, Medicaid reimbursement rates remain frozen, and both Medicaid and Medicare are not keeping pace with costs associated with delivering care.  This places a tremendous financial burden on our operating budget. 
  • UVMC patient volumes have been down in many areas, especially outpatient, also due at least in part to individuals losing insurance benefits and postponing elective procedures and/or care that isn’t life-threatening.  At the same time, our acuity levels and length of stay have been on the rise, resulting in increased expenses without adequate corresponding reimbursement from payers such as Medicare and Medicaid.          
  • Pension costs have increased significantly due to loss of investment income from the overall market downswing. 
  • State budget proposals, if passed, are projected to negatively impact UVMC, the PHP affiliation and all Ohio hospitals.     
  • Credit markets remain tight, making it more challenging to secure funding for such capital projects as information technology and construction.

“Heightened cost efficiencies are the reality in health care today and for the future, but the highest priority for UVMC continues to be our patients,” stressed Douglas R. Murray, Chairman of the UVMC Board of Directors.  “As we proceed with necessary changes, UVMC maintains our absolute commitment to serving our community.” 

VMC currently remains Miami County’s largest employer with approximately 1,700 employees.

“Our local health system has been hit hard by the economic realities facing hospitals throughout the nation.  We appreciate the understanding and support of the UVMC family and the community as we address these realities,” Maiberger added. “Together, we will meet the challenges, maintain the strength of our organization, and stay true to our mission of providing quality health care services for the Miami county area.”