Cost cutting leaves
Years of losing money may beGovernment may restore hospital aid By Tim Ruel
over, but union leaders say
nurses have a heavier workload
and a lot more pressure
After three years of bleeding red ink, Queen's Medical Center faces its new fiscal year having to deal with a myriad of challenges.
Executives at Hawaii's largest hospital predict they will return to the black this fiscal year, which began July 1, after streamlining and cutting costs over the past years.
But union representatives for the hospital's nurses say the cost cutting has come at a price as nurses face increased workloads and job stress.
The cost cutting was a response to lower federal Medicare payments, something hospitals across the nation have been grappling with.
Queen's, one of Hawaii's biggest employers with about 3,300 workers, has lost more than $21 million in operations since 1998. To cut costs, the medical center has trimmed more than 460 positions in the past four years, including nearly 200 layoffs.
For example, the hospital closed its cardiac rehabilitation unit last month, laying off 64 workers and cutting $7.5 million in costs.
It also outsourced its laundry in February, saving $675,000 a year and displacing 72 employees. Queen's is also leaving the health plan business. It lost $4.3 million last year from two troubled plans.
Cutting costs helped Queen's hold its price-rate increase for hospital services -- 3.5 percent -- at the level of U.S. inflation this year, executives say.
"You have to deal with the expenses, because for every dollar of expense you cut, that's a dollar that goes to the bottom line," President and Chief Executive Arthur Ushijima said. "It's harder to grow the revenues, and it takes more time, because it takes roughly $30 of revenue to generate a dollar of profit."
Accreditation preparationsQueen's, a nonprofit that funnels earnings back into the business, expects to return to the black this fiscal year, projecting $900,000 in operating income.
"I think from a broader standpoint, we're really trying to find good business principles in managing the hospital," Ushijima said.
Queen's management has more challenges to juggle than just its budget.
The union that represents 700 registered nurses at Queen's says cost-cutting efforts and a burgeoning workload are hurting the hospital in other vital areas, including its accreditation.
Like 19,500 other hospitals nationwide, Queen's needs to be accredited to collect federal Medicare and Medicaid reimbursements -- 45 percent of its total revenues. Queen's is due for its three-year check-up this fall.
During a weeklong test, examiners from the Chicago-based Joint Commission on Accreditation of Healthcare Organizations will probe the hospital's records, check its facilities and interview staff, then make their call before the end of the year.
The commission has not announced the exact test date yet, but Queen's has been preparing.
In April, the hospital ran its own five-day mock survey of operations. Officials said Queen's did well but needs to improve in three areas to pass:
Documentation of patients' individual plans of care;"The survey showed us that we still have a lot of work to do," Ushijima wrote in a May 26 memo to employees. In a later interview, he detailed several efforts that would fix problems in time.
Education of employees in how to handle patients in specific age groups;
And participation in employee performance improvement activities.
Facing accreditationRich Meiers, president and chief executive of the pro-hospital Healthcare Association of Hawaii, said Queen's should not have trouble getting accredited.
The last time Queen's faced accreditation in 1997, the commission passed the hospital, but identified several problem areas that Queen's had to fix, which it did within a year.
But union leaders say they are concerned about accreditation this time around because the workload and stress levels have ballooned.
New ER increases workloadOne big source of the increased workload is the new $14 million emergency room Queen's opened off Punchbowl in November, doubling the size of its old ER. Admissions to the new ER are up substantially from last year.
Overall productivity at the hospital is up 11 percent, with outpatient surgery up 54 percent.
Meanwhile, the total number of nurses has increased less dramatically, up to 888 in June from 848 last year and barely above 874 in 1998.
Staffing is based on a widely accepted formula calculated from patient needs, said Queen's spokeswoman Gail Tiwanak.
But union officials said there is more to it than that.
The increase in staff is mostly from call-in nurses, who do not get union benefits or pay dues. Meanwhile, the union's full-time and part-time members at Queen's have dropped to 700 from 825 in 1996, said Nancy McGuckin, executive director of the Hawaii Nurses Association.
With a leaner pool of workers, Queen's is more frequently forcing nurses to work overtime to fill staff shortages, according to Marian Marsh, HNA's director of collective bargaining. That means nurses sometimes spend 16 hours running between patients before their shifts end.
Forced overtime for nurses is a mainland trend, new to the state, and is not happening at Hawaii's other hospitals yet, according to a recent union newsletter.
Nurses at Queen's receive time-and-a-half and even double-time for overtime. Yet, the nurses still complain about the practice, Marsh said.
Heavy stress on staff and poor morale would be noted by the commission, and could hurt Queen's accreditation, she said.
"It's the common denominator in everything."
Queen's is not alone in the growing debate over stress and the bottom line.
All Hawaii hospitals are increasing the workload, according to Dr. Arlene Meyers, a Wahiawa private-practice physician and attorney who leads the 1,300-member Hawaii Coalition for Health, a watchdog group. Financial pressure from the federal government is the reason.
"It's a very serious problem," Meyers said. "They (hospitals) tend to work the nurses to death."
Stress on nurses 'incredible'Pat McLachlan, who represents unionized nurses during collective bargaining with hospitals statewide, said she routinely gets phone calls from nurses who take prescription tranquilizers while on the job to deal with stress.
McLachlan said these nurses do not endanger patients. Queen's has programs, backed by the state government, to diagnose, treat and even discipline those who abuse substances. McLachlan said her point is that it is wrong for nurses to need medication to do their life-saving jobs.
"The day-to-day stress on the nurses is just incredible," McLachlan said.
CEO Ushijima contends that nursing has always been a tough profession. "It's very demanding. And certainly the nurses are right on the front line."
Physicians are facing cutbacks too, Ushijima added, saying Queen's is trying to give the best care while dealing with falling revenues.
Although management and union do not agree on many work-force issues, they do see eye-to-eye on a clearer crisis: a nursing shortage has begun.
Queen's is having trouble filling positions, a sign that nursing roles statewide are dropping in a pattern similar to the mainland, according to the hospital. Ushijima said part of the problem is nurses are reaching retirement age.
"We're going to see some very major human resources issues," Ushijima said.
'It's a scary time'Queen's is countering the shortage by hiring new graduates, fostering partnerships with nursing schools and recruiting on the mainland, among other efforts.
But McLachlan said there's a link between falling roles and the increasing workloads.
Nurses are fed up with the stress and with their careers, and the shortage will deepen as more nurses leave the profession, she said.
A nurse at Queen's for 12 years, McLachlan is now on permanent leave from work with a bad knee and will retire in September at age 62.
Although she feels discouraged by changes at Queen's, McLachlan still has hopes for a labor council created in December at Kaiser Medical Center.
The Nurse Advisory and Staffing Council, composed of union and management representatives, makes recommendations on disputes at Kaiser, such as staffing and patient care.
If the council works out, such a system could benefit Queen's, and even hospitals nationwide, she said.
All the same, McLachlan is glad to be going.
"It's a scary time."
Government mayBy Tim Ruel
restore hospital aid
Financial problems for many U.S. hospitals began with the Balanced Budget Act of 1997, when the federal government began cutting Medicare and Medicaid reimbursements to control spiraling health care costs.
Health care providers were supposed to lose $115 billion in federal spending through 2002.
But revised figures show providers will actually lose $250 billion, with Hawaii's providers alone losing $157 million, said Rix Maurer, vice president of finance at Queen's Medical Center.
Private insurers, such as Hawaii Medical Service Association, also have cut their reimbursements to hospitals, Maurer said.
Queen's has lost $16 million from the cuts so far, and expects to lose $9.53 million more during the fiscal year ending next June 30, Maurer said.
The medical center, which posted a $4.85 million operating gain in 1996, has since registered losses every year, and lost a record $10 million in fiscal 2000.
But hospitals, including Queen's, may get a small reprieve from the government.
The White House recently unveiled an initiative to restore $21 billion in spending on reimbursements to health care providers over five years, beginning in April 2001.
The House is considering a similar resolution.