Last Friday, the leadership team was challenged to revise their departmental budgets for the second half of the year. As a part of new developments, KSB Hospital is poised to receive considerably less payment for services beginning soon.
First, Blue Cross/Blue Shield of Illinois has indicated that they intend to renegotiate the contract they have with us. According to the terms of the agreement, they can give ninety days notice to end the current contract and renegotiate a new one. Several hospitals across the state have recently renegotiated contracts, so we have some idea of what to expect.
Second, the State of Illinois recently enacted Medicaid reform legislation. Part of the reform package was a 3.5% rate reduction for hospitals. There were some positive financial changes in the package too, but the rate cut is the most direct result.
Third, as we’ve done for more than a decade, we promised our Board of Directors that we would produce a 5% margin for the year. Our margin allows us to reinvest and develop our organization, through employee raises, capital equipment, facility improvements, and expanded services.
So, with revenue reductions on the way and a commitment to maintain our margin, how can we succeed? That’s what we’re asking departments to work on now.
Your directors are working on revised budgets right now to reduce our expenses by $2 million between July and December, that’s a reduction of about 2% across the organization.
Because of your hard work and commitment to excellent patient service, we’re still planning to increase employee pay as a part of the upcoming performance reviews. But that means that we have to work extra hard to find opportunities to save $2 million without negatively affecting employees or patients.
As always, your input is an important part of finding solutions. Share your comments here on The Pulse or talk to your director or vice president with cost saving ideas. Good ideas can come from anywhere and anyone.
I’m confident we can do it. Working together, we can find opportunities for better efficiency, smarter financial decisions, and cost savings. We need everyone on board for this challenge–but together, I’m confident we’ll make KSB Hospital stronger, leaner, and more committed than ever to serving the community.