Jan. 18-24, 2002
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Hospital cancels employee raises
Will revisit issue in May or June

By Matt Kelly

Chief Clinical Officer Pam Cipriano urged Medical Center employees at a jam-packed town hall meeting Monday to remain upbeat in the face of can-
celed raises.

“Don’t let this blind you,” she said, emphasizing the importance of the center staying solvent. “We don’t want to get into the position of not being able to buy operating room equipment.”

Employees were told last week in a Jan. 10 letter signed by William E. “Nick” Carter, senior vice president of operations, that planned pay increases were canceled because of the hospital’s financial condition.

Two meetings were scheduled to discuss the moves, and employees took full advantage. The first meeting, held Monday night in the 65-seat Camp Heart Auditorium, drew a standing-room-only crowd, with people lining the walls, sitting on the risers and standing in the hall.

Some employees said the announcement, included with pay slips, contributed to poor morale, but Cipriano reminded them that other institutions were looking at layoffs and red ink. She said the Medical Center’s management team — which has authority over employee compensation under the hospital’s codified autonomy rules — had to strike a balance. “This is the best decision we could have made,” Cipriano said.

Similarly, faculty and classified employees in the state system did not receive raises this year. Outgoing Gov. Jim Gilmore included a 2 percent salary increase in his proposed budget for next year, but its prospects are uncertain as legislators and Gilmore’s successor, Mark Warner, face a $1.2 billion shortfall in the current fiscal year.

The Medical Center had an operating margin of revenues over expenses of just 0.6 percent — considerably less than the 5.9 percent budgeted — for July through November 2001, according to figures presented by Larry Fitzgerald, the Health System’s associate vice president of finance.

Hospital admissions for that period, though 2 to 3 percent over the previous year, were 635 fewer than were anticipated in this year’s budget. While this brought the hospital a $1.4 million operating margin, it is $13.4 million less than expected. Labor and benefit costs were $4.9 million over budget.

One employee complained that with hikes in insurance premiums, she was drawing less take-home pay now. Another, from the Newborn Intensive Care Unit, said she thought eliminating raises sent a negative message, since many employees were doing the work of two people. She urged Medical Center officials to reinstate the raises as soon as possible.

Carter, who said canceling the raises was a measure not taken lightly, told employees the issue would not be revisited until May or June “unless there is a remarkable turnaround.” He said he wants to be sure the hospital’s recovery is on solid footing before committing to the additional expense.

Carter acknowledged that an increase in outpatient services would create more work for less money, explaining that some reimbursements — the amount of money insurance companies will pay for services rendered — had changed. Selected Medicare rates, for example, have dropped 5 percent in the past year.

Other factors contribute to decreasing morale, employees said. Heavy workloads leave some employees unable to take lunch breaks, they said, and rumors were circulating of temporary nurses making more money than staff members.

Cipriano urged employees not to react to rumors. While she acknowledged that the hospital offered incentives to entice temporary nurses to take more undesirable shifts, she said there is less dependence on them now, and with flexible scheduling, she can bring in only the workers she needs on a shift.

Others asked about early retirement incentives, but Carter said this would have to be acted upon by the governor and the General Assembly.

There also was concern about space. One employee said she worked with a doctor whose specialty could bring in more patients, but she was not sure if there would be adequate room for them. Carter said there are several efforts under way to open more space for some departments.

Monday’s town hall meeting will be the first in a series between hospital staff and management, said Cipriano, who added that hospital managers plan to spend more time on the floors meeting with employees.

Carter reviewed points from the Health System’s strategic plan and said he wanted the Medical Center to reflect the values of respect, integrity, stewardship and excellence. He said delaying raises, while a difficult decision, was an example of stewardship and managing resources responsibly.


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