Dartmouth-Hitchcock Boards Approve FY2011 Budget, Affirm Plan for Closing Operating Margin Gap
September 13, 2010
The Dartmouth-Hitchcock Boards of Trustees have approved a Fiscal Year 2011 budget, intended to close a projected $50 million budget gap while maintaining the organization's goals of high-quality, high-value, patient-centered healthcare.
At its regular quarterly meeting Sept. 2-3, the Trustees also reaffirmed Dartmouth-Hitchcock's commitment to several major projects, including the "eD-H" electronic health records project and the ongoing development of Dartmouth-Hitchcock Health, an integrated health system that will coordinate resources, expand access to the specialized services and research available at Dartmouth-Hitchcock Medical Center, and enhance the quality of care in communities throughout New Hampshire and eastern Vermont.
"Dartmouth-Hitchcock is as well-positioned as any academic health system in the nation to excel in the years ahead," said Hospital Board of Trustees Chair Jennie L. Norman. "We have the strategic blueprint in place to guide us. Yes, we have some very real challenges to overcome in the near term, but our future is bright, and we are confident our organization and people are up to this test."
The Fiscal Year 2011 budget reflects the changing health care, demographic, and economic environment, as well as Dartmouth-Hitchcock's continuing evolution as a model of delivering high-quality, value-based patient care at lower cost. The plan was informed by Dartmouth-Hitchcock's comprehensive patient-centered and academically-based mission and vision, and supported by clearly defined strategic goals and imperatives that serve as Dartmouth-Hitchcock's guide for advancing the health of the region and the nation.
"As we address longer–term plans, we face immediate issues," wrote Dartmouth-Hitchcock Co-Presidents Nancy A. Formella, MSN, RN, and Dr. James N. Weinstein, in a Sept. 13 message to all Dartmouth-Hitchcock employees. "Our challenges, like those of other health care organizations across the United States, are real. We have been hit hard by the recession, reduced payments, and increasing need for our services."
In 2009 alone, Dartmouth-Hitchcock absorbed Medicaid losses of more than $57 million in New Hampshire and almost $30 million in Vermont. Over the past six months, a steadily increasing gap between expenses and revenues led to a significant shortfall in Dartmouth-Hitchcock's Fiscal Year 2010 operating budget.
The shortfall in Fiscal Year 2010 placed additional pressure on the starting point for Dartmouth-Hitchcock's Fiscal Year 2011 budget which, if left unchecked, would have resulted in a $50 million gap between revenues and expenses.
The specific steps in the budget plan were outlined by Formella and Weinstein in their message to employees, and include:
- A 2% average salary increase, based on performance, effective January 1, 2011. Dartmouth-Hitchcock's presidents, officers, vice presidents, department chairs, and center directors will receive no salary increase.
- A reduction in the size of the Dartmouth-Hitchcock workforce of 300 full-time equivalent positions. The reduction, over the next 12 months, will be accomplished through elimination of targeted vacancies, attrition, and redesigning work, with layoffs as a last resort. The reductions will come from across the Dartmouth-Hitchcock system.
- A change in the portion of health insurance paid by employees. Dartmouth-Hitchcock will pay approximately 80% of employees' health insurance costs, bringing Dartmouth-Hitchcock in line with cost sharing at other hospitals and health systems. To help employees with these higher costs, health insurance contributions will vary by salary levels: those who earn less will pay less for comparable premiums while those who earn more will support more of the cost-sharing.
- The base defined benefit and defined contribution plan will remain the same, and shall continue to be funded. For those who participate in the matching program, effective January 1st, Dartmouth-Hitchcock contributions will no longer be automatically deposited each pay period. The Boards of Trustees may approve an annual contribution to the matching program for above-budget performance.
- There will be no changes or reductions to the Earned Time or vacation program for current employees of Dartmouth-Hitchcock. Employees hired after January 1, 2011, will be offered a lesser amount of paid time off.
- There will be no change to the coverage of the health insurance plans offered, nor will there be any changes in short- and long-term disability or life insurance benefits.
In addition, Dartmouth-Hitchcock will continue to aggressively identify cost-savings in non-personnel expenses, including such areas as supply management, travel, and purchased services.
"These decisions have been difficult to make but they were guided by our mission and vision and the principles of fairness and equity," wrote Formella and Weinstein. "Above all, our decisions have been directed by our commitment to the patients and families who define our reason for being here."
Other board actions
In addition to the approval of the Fiscal Year 2011 budget, the Dartmouth-Hitchcock Boards also:
- Reaffirmed their commitment to Dartmouth-Hitchcock Health, which will allow Dartmouth-Hitchcock to strategically partner with other health care providers in the region to achieve growth and greater efficiency through collaboration, and not costly and redundant competition. This collaborative approach will mean greater value for the health care consumer, making care better, safer, and more efficient through the integration of services across the full cycle of care.
- Voiced continuing support for "eD-H," the April, 2011, launch of Dartmouth-Hitchcock's organization-wide clinical information system, also known as the electronic health record (EHR). The eD-H implementation will meet the federal mandate for the EHR three years ahead of the 2014 deadline, and will connect virtually every key clinical function in the organization, helping to deliver better, safer, more coordinated and more efficient care.
"Dartmouth-Hitchcock employees have been taking care of the people of northern New England for generations, and we are deeply committed to the public trust we hold," wrote Formella and Weinstein. "We feel extremely fortunate to be working with individuals who demonstrate every day, the care, commitment, and continuing excellence that makes our future so bright. Together we face some very real challenges, but we are confident we - all of us - are up to the test."