At a Sept. 27 leadership meeting, MGH administration updated managers and supervisors on key issues affecting the hospital, including the fiscal year (FY) 2011 and 2012 budgets, revised employee health benefits and plans to backfill units vacated by moves into the Lunder Building.
Peter L. Slavin, MD, MGH president, opened the meeting by sharing several pieces of good news at the MGH, including the ongoing bicentennial celebrations and successful Sept. 16 gala; the opening of the Lunder Building; recognition as a top employer from the AARP; and four prestigious National Institutes of Health (NIH) grants awarded to MGH researchers. In addition to announcing that nearly $1.3 billion has been raised toward the $1.5 billion goal of the Campaign for the Third Century of Medicine, Slavin offered a generally positive review of FY11.
“We’re doing well financially this year in terms of our operating budget, because of the intensity of care required by our patients, the NIH funding we’re receiving and associated overhead on the revenue side, and our expense management,” said Slavin. “These three factors have put us significantly ahead of budget.”
But Slavin cautioned that the hospital’s major revenue sources are likely to be threatened going forward. “It’s particularly important that we try to get ahead of impending revenue challenges and try to not only make health care better but more affordable through the care redesign and patient affordability efforts associated with Partners Strategic Initiatives and the related work here at the MGH.”
Echoing Slavin’s financial forecast, Sally Mason Boemer, senior vice president of MGH Finance, offered further details about the FY11 and FY12 budgets. She said that, through August, the MGH outperformed budget in 2011. The key drivers behind the positive result this year were higher-than-anticipated nonpatient revenue, including research and royalties; unfavorable payor-rate mix and lower-than-anticipated patient volume that were offset by the intensity of patient care. Although expenses were slightly unfavorable, expenses that could be controlled were managed effectively, in part because of reductions implemented as a result of last year’s budget review process.
The budget set forth for FY12 anticipates a modest increase in patient activity but also includes more built-in contingencies to help withstand the challenging economic environment, with risk factors including the renegotiation of a number of commercial contracts, cuts to Medicare and Medicaid and newly tiered insurance plans that classify the MGH as a higher-cost care facility. On the expense side, the budgeted cost of supplies is reduced, again attributed to decisions made during the budget review process. The majority of net investments are in salaries and benefits; employees will be eligible for a 2 percent merit program next year and 70 new
full-time employee positions are budgeted to cover an anticipated increase in patient activity. In addition, fixed expenses rose related to the opening of the Lunder Building.
In line with strategies to keep MGH operations as cost effective as possible, Jeff Davis, senior vice president for Human Resources, presented information about upcoming changes to employee health benefits that are expected to enhance overall quality and efficiency by encouraging employees to seek care from Partners-affiliated providers. Davis said full details about the health benefits redesign will be announced to the MGH community Oct. 17.
Jeanette Ives Erickson, RN, DNP, senior vice president for Patient Care and chief nurse, discussed plans for backfilling the units that have moved into the Lunder Building. Ives Erickson said the backfill will occur in staged phases and align with a long-term growth strategy.
Read more articles from the 10/7/11 Hotline issue.