Private Hospitals show Virginia’s State Hospitals, Colleges and Universities the Way to Efficiency

Valley Health Winchester Medical Center

by James C. Sherlock

We read far too often about funding “crises” in government institutions and programs.

The general public, me included, would be far more attentive and sometimes supportive if government would follow the lead of private companies and continually right-size itself and emphasize customer-facing services.

The health care industry — or rather the private healthcare industry — consistently shows the way.

Even not-for-profits are not for losses.

Count, if you can, the number of times in your life that a government organization has announced job cutbacks in administration in order to optimize expenditures and provide better service.

Yeah, me neither.

Students at one of my favorite state schools (it is northwest of Richmond and west of Orange County) are protesting that their faculty is underpaid.

The solution to that problem, if indeed the Board of Visitors considers it a problem, writes itself.

Some of today’s headline articles from that industry from Becker’s Hospital Review:

Valley Health, a six-hospital health system based in Winchester, Va., eliminated 31 administrative positions. The job cuts are part of the consolidation of the organization’s leadership team and administrative roles.

Roseville, Calif.-based Adventist Health plans to go from seven networks of care to five systemwide to reduce costs and strengthen operations. The reorganization will result in job cuts, including reducing administration by more than $100 million.

Southern Illinois Healthcare, a four-hospital system based in Carbondale, announced it would eliminate or restructure 76 jobs in management and leadership. The 76 positions fall under senior leadership, management and corporate services. Included in that figure are 33 vacant positions, which will not be filled. No positions in patient care are affected.

Citing a need to further reduce overhead expenses and support additional investments in patient care and wages, Traverse City, Mich.-based Munson Health is eliminating 31 positions and leaving another 20 jobs unfilled. All affected positions are in corporate services or management. The layoffs represent less than 1 percent of the health system’s workforce of nearly 8,000.

West Reading, Pa.-based Tower Health on Nov. 16 laid off 52 corporate employees as the health system shrinks from six hospitals to four. The layoffs, which are expected to save $15 million a year, account for 13 percent of Tower Health’s corporate management staff.

Sioux Falls, S.D.-based Sanford Health announced layoffs affecting an undisclosed number of staff in October, a decision its CEO said was made “to streamline leadership structure and simplify operations” in certain areas. The layoffs primarily affect nonclinical areas.

Perhaps there is something in there useful for governments to learn. Or not.

Perhaps someone can tell us the last time a state hospital in Virginia cut administrative staff to provide better service to patients. I may have missed it.

The slashing of administrative positions both to raise pay for key faculty and reduce costs to students is way overdue at Virginia’s bloated public colleges and universities.

Then there are the programs for  which demand has slackened. Another target-rich environment. Did I mention that Marymount University in Arlington just announced the elimination of a slew of majors, spurring “fierce faculty protest”?

Many Virginians would appreciate better efficiency in our state schools. Fierce protests or not.

Among those are taxpayers, students, students’ parents and the poor, some of whom without support can borrow $80,000 or more to fund a bachelor’s degree at one of those institutions.

In-state.


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Comments

46 responses to “Private Hospitals show Virginia’s State Hospitals, Colleges and Universities the Way to Efficiency”

  1. DJRippert Avatar
    DJRippert

    Meanwhile, GM is looking to remove a “majority” of its 58,000 salaried workers (with buyouts).

    https://www.cnbc.com/2023/03/09/gm-buyouts-us-salaried-workers.html

      1. DJRippert Avatar
        DJRippert

        When was that article published? 2008?

  2. DJRippert Avatar
    DJRippert

    But that’s OK … all those government workers who can’t be laid off (or fired) means that the government is efficient and effective, right?

    Ummmm ….. maybe not ….

    https://www.cnbc.com/2023/03/09/how-medicare-and-medicaid-fraud-became-a-100b-problem-for-the-us.html

    $100B per year in fraud. And …. according to the article, that’s a conservative estimate.

    1. LarrytheG Avatar
      LarrytheG

      well yes.. we could get rid of the NTSB, FAA, FHA, Social Security, Medicare, NASA, NOAA, and I’m sure, others…. gotta be a lot of sloth and fraud in all of them.

      1. DJRippert Avatar
        DJRippert

        The federal government, over many decades, has spent an increasing percentage of the US GDP. One would hope that taking more and more of the economic pie would result in better operations.

        Where is the accountability?

        1. LarrytheG Avatar
          LarrytheG

          Each agency has watchdogs, right? Inspector Generals that do audit and there is GAO which audits.

          https://uploads.disquscdn.com/images/f4a621a79595c90b42d1b847f753fd70899bc92b9c2608a0c3451157bb040138.jpg
          https://www.oversight.gov/
          In Virginia we actually have JLARC and the Auditor of Public accounts.

        2. f/k/a_tmtfairfax Avatar
          f/k/a_tmtfairfax

          Funding the expansion of broadband connections to all Americans is a good and useful effort. But the GAO found more than 100 federal programs operated by 15 agencies for this purpose.

          https://www.gao.gov/products/gao-22-104611#:~:text=We%20identified%20over%20100%20federal%20programs%E2%80%94administered%20by%2015,broadband%20strategy%2C%20and%20more.%20Highlights%20What%20GAO%20Found

          What if Congress and the Administration acted to bring this down to, say, 15 programs operated by 5 agencies? How many fewer employees and consultants would be needed to administer the remaining programs? How much more money could be used for the deployment of broadband connections to Americans without them?

      2. James C. Sherlock Avatar
        James C. Sherlock

        What fight, exactly, are you picking here Larry and why?

        I wrote about government hospitals and universities. Do you think they are as efficient as their private counterparts?

        Or just want to change the subject? Or just keep writing until everyone else falls away exhausted?

        1. LarrytheG Avatar
          LarrytheG

          All hospitals public and private get a lot of their revenues from insurance reimbursements.

          true?

          Do even non-govt hospitals really “compete” in a true free market?

          1. James C. Sherlock Avatar
            James C. Sherlock

            Virginia does not have anything approaching a free market in hospitals except in the Richmond area courtesy of COPN.

          2. LarrytheG Avatar
            LarrytheG

            Is there “competition” in the sense that if a given hospital can make a “profit” off of the insurance reimbursement? In a way, this is a “market” with the offered price held constant (for a given zip).

            So if one hospital is very, very efficient and controls costs does that better than another hospital, they’d “make” a profit – even if they are a “non-profit”.

            buy any of this?

          3. LarrytheG Avatar
            LarrytheG

            You may find this anecdotal account interesting. We have two hospitals in Fredericksburg. One is the one that has been here forever and the other is an HSA maybe 5-10 years old.

            There is “competition” between the two on both prices for services as well as facilities despite your feelings about COPN. First the HSA was allowed to build and second, both hospitals are now building things like stand-alone ERs in each others “territory”. Finally, on something I had done recently, Mary Washington provided up-front estimates and disclosure of any anticipated out-of-pocket. In addition to that, on one that I had that had an out-of-pocket, it was “discounted” so the bill was
            zero after they did that.

            It appears to me that for some reason COPN is not doing what you claim it does – at least in Fredericksburg.

          4. James C. Sherlock Avatar
            James C. Sherlock

            That’s one.

  3. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    Don’t worry, Jim, the Governor has got this in his sights. in announcing his appointment of a Chief Transformation Officer to help make government more efficient, he explained, “I’ll admit I’ve never run a government agency. But I know something about running a business. And we’re going to bring business efficiency to government bureaucracy. That’s why I appointed a Commonwealth Chief Transformation Officer—to oversee government transformation. We will make government more responsive, more efficient, and more transparent.”

    I’m sure that we will see his proposals to cut administrative costs and provide better service in his budget proposals next fall.

  4. LarrytheG Avatar
    LarrytheG

    There’s one TRUE 100% govt hospital and that is the VA system. Correct? Do we know if they are “efficient” and “cost effective” compared to other public and private hospitals?

    https://uploads.disquscdn.com/images/27c3fe2cfdd94adeb8ca4cc9c15e650353f5ebdeea9cd1224d2c29e798dbe5c6.jpg

  5. LarrytheG Avatar
    LarrytheG

    re: ” Count if you can the number of times in your life that a government organization has announced job cutbacks in administration in order to optimize expenditures and provide better service.”

    https://uploads.disquscdn.com/images/0dfe598cbe55573f76337808b818aa499948b182cf2979cd9bb2cb857532764f.jpg

    1. DJRippert Avatar
      DJRippert

      “Count if you can …”. That’s one. And it ended 18 years ago. Got a second, Larry?

      1. LarrytheG Avatar
        LarrytheG

        multiple times over the years, talk of a another… would think pretty hard for a military man to forget! 😉

        but here you are:

        https://www.mentalfloss.com/article/51652/11-defunct-federal-agencies

        I admit, doesn’t happen much but DOD is bigger than all other agencies put together, no?

        https://uploads.disquscdn.com/images/e12de5f6922e72ad747a05d197bee08fe2612ff393bd337191b7b183cde8b8aa.jpg

        1. DJRippert Avatar
          DJRippert

          This chart must omit entitlement programs like SNAP. No?

        2. James C. Sherlock Avatar
          James C. Sherlock

          At what point in the article did I raise the issue of the military, or to be even more general, the federal government.

          Is the efficiency of the federal government the hill you want to die on?

          1. LarrytheG Avatar
            LarrytheG

            Naw. Just wanted to point out that the govt, does, in fact, lay off people and shut down projects and close bases, and dry-dock ships, etc… one can argue about “efficiency”, fraud, waste and abuse but the claim that agencies do not cut is simply not true. I’m a camper and I use the Federal Parks and campgrounds and I can assure you they’ve made cuts AND started charging fees…AND have started using volunteers to good effect.

            DOD , as you probably well know, does not replace retired govt workers and replaces them with contractors who can and are laid off if a program is cut back. Does happen.

          2. LarrytheG Avatar
            LarrytheG

            I was responding to DJRs claim of ever seeing the govt cut jobs…. hospitals or otherwise…

            they do…

    2. James C. Sherlock Avatar
      James C. Sherlock

      I don’t count the uniformed military.

      The military departments, yes. See the bloated systems commands.

      1. LarrytheG Avatar
        LarrytheG

        these: ?

        Naval Sea Systems Command (NAVSEA)
        Naval Air Systems Command (NAVAIR)
        Naval Information Warfare Systems Command (NAVWAR) (formerly SPAWAR),
        Naval Facilities Engineering Systems Command (NAVFAC)
        Naval Supply Systems Command (NAVSUP)
        Marine Corps Systems Command (MCSC)

        1. James C. Sherlock Avatar
          James C. Sherlock

          That is just the Department of the Navy.

          Ever wonder why ships are so expensive?

          Naval Sea Systems Command (NAVSEA) has over 80,000 personnel. NAVSEA does “planning and ordering”.

          We currently commission seven or eight new ships a year. They are not built by NAVSEA’s 80,000 people.

          1. LarrytheG Avatar
            LarrytheG

            these agencies are not integral to the mission?

            I thought all ships no matter who builds them go through NavSea? Wrong?

          2. James C. Sherlock Avatar
            James C. Sherlock

            I did not say NAVSEA is not necessary. I said it does not need 80,000 employees.

          3. LarrytheG Avatar
            LarrytheG

            probably an opinion? I admit, I’d have no idea for a given agency what is the “right”
            amount of staffing. You do?

            Is that 80,000 govt employees PLUS contractors in addition?

          4. LarrytheG Avatar
            LarrytheG

            probably an opinion? I admit, I’d have no idea for a given agency what is the “right”
            amount of staffing. You do?

            Is that 80,000 govt employees PLUS contractors in addition?

          5. James C. Sherlock Avatar
            James C. Sherlock

            Yes.

    3. f/k/a_tmtfairfax Avatar
      f/k/a_tmtfairfax

      Back when Clinton and Gore were reinventing government, the Vice President announced that the Social Security Administration announced it would be implementing a plan whereby checks would be mailed throughout the month on a staggered basis enabling the Agency to reduce employees. The union contacted the White House and the plan was quietly dropped.

      1. LarrytheG Avatar
        LarrytheG

        they mail checks instead of direct deposit? What the heck does mailing staggered or not have to
        do with anything anyhow? One presumes the folks who are hired full time – have work to do full
        time no matter how mail is done. No? What’s in the water you’re drinking down that way these days? 😉

        1. James C. Sherlock Avatar
          James C. Sherlock

          Bill Clinton was elected in 1992. It wasn’t until 1996 that U.S. law required the federal government to make electronic payments, such as direct deposit, available by 1999.

        2. f/k/a_tmtfairfax Avatar
          f/k/a_tmtfairfax

          Yes, they used to mail checks – once a month at the same time. The SSA was sized to perform this task. Gore announced that the reinventing government task force had proposed staggering the mailing of checks over a month. This would allow the SSA to lay off employees and reduce administrative costs because it took fewer employees to oversee the mailing of checks staggered over a month than when they were all sent at the same time. The affected union went to the White House and complained about the job loss. As a result, the feds cancelled the cost-saving proposal; thus, keeping inefficiencies in the SSA.

  6. Stephen Haner Avatar
    Stephen Haner

    In my too-0ften interactions with the health care system these days, I see no evidence of shrinking management but plenty of evidence of shrinking patient care. And $80,000 doesn’t buy you much, at least based on the list prices before Medicare or some other insurance pays the negotiated amount. I don’t think they have a damn thing to teach government or higher ed.

    1. LarrytheG Avatar
      LarrytheG

      maybe different opinions on Medicare and Private insurance reimbursements but the point is that it’s the reimbursements that control the prices charged and force efficiencies unless the provider wants to eat what is not reimbursed.

      right?

    2. James C. Sherlock Avatar
      James C. Sherlock

      I did not say they were objectively efficient, though much of their administrative costs are driven by regulation and government insurance program documentation requirements.

      I also did not say that all of them are necessarily good at their jobs.

      But because they have to be mindful of their bottom lines, they are driven to be more efficient than government counterparts. They reduce management and administrative expenses first.

      Those stories I quoted are off of just today’s wire.

  7. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    Don’t worry, Jim, the Governor has got this in his sights. in announcing his appointment of a Chief Transformation Officer to help make government more efficient, he explained, “I’ll admit I’ve never run a government agency. But I know something about running a business. And we’re going to bring business efficiency to government bureaucracy. That’s why I appointed a Commonwealth Chief Transformation Officer—to oversee government transformation. We will make government more responsive, more efficient, and more transparent.”

    I’m sure that we will see his proposals to cut administrative costs and provide better service in his budget proposals next fall.

    1. LarrytheG Avatar
      LarrytheG

      Well, he DID do something about occupational licenses, no?

    2. Stephen Haner Avatar
      Stephen Haner

      Every governor in my working life…. 🙂 But we’ll see.

    3. VaPragamtist Avatar
      VaPragamtist

      “I’ll admit I’ve never run a government agency.”

      . . .and neither has his Chief Transformation Officer. In fact, from what I can tell, no one in the CTO’s office has even held a full-time job in state government (except for the Special Assistant, who formerly performed administrative tasks).

      I’m all for outside perspective. But that also has to be combined with an understanding of how things work.

  8. LarrytheG Avatar
    LarrytheG

    To be honest, hospitals are largely funded from private and public insurance reimbursements, as opposed to competing against each other on most services.

    In other words they don’t charge for services like a true private sector company in competition with others might do

    What hospitals get for things like radiation treatment or heart transplants, etc, is limited to what Medicare and private insurance companies will reimburse for.

    It’s not a truly “free market” with competition per se except for a smaller number of services that insurance may not cover.

    So really, the BEST hospitals ARE the ones who have gotten more efficient and still maintain high Medicare ratings and the hospitals that cannot control their costs , go broke , as reported in Beckers.

    https://uploads.disquscdn.com/images/7f9fa0de8094af938f73035e588d9c3dce88da636a6145a2a61a9d0c4caed560.jpg

    https://www.beckershospitalreview.com/finance/12-latest-hospital-bankruptcies-closures.html

    1. James C. Sherlock Avatar
      James C. Sherlock

      You are correct. The marketplace punishes the least efficient and effective providers. But Virginia is dominated by state-protected monopolies. Leading to the survival or more inefficient and ineffective hospitals at higher prices than would otherwise be the case.

  9. James McCarthy Avatar
    James McCarthy

    Hospital clients, I.e., patients, as a rule are not seeking services voluntarily while college students are. Faculty don’t “treat” students to education. These distinctions underscoring institutional mission tend to shape behavior including finance and administration. Private hospital leadership in adapting to change is driven by forces not so important to colleges and universities.

  10. joelrubin Avatar
    joelrubin

    Need to consolidate schools to realize real savings.

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