The belt is getting even tighter at Vanderbilt University Medical Center.
In a letter to employees Monday, Vice Chancellor for Health Services Jeff Balser said his leadership has set a $100 million cost savings target for the hospital complex's newly started fiscal year. In the year after that, another $150 million is to be cut from the budget, which now is about $3.3 billion. In the past two years, Balser has pushed through cost savings of about $90 million.
Balser said VUMC's latest austerity push "will preserve the vast majority of our mission-critical programs while keeping compensation at market-competitive levels" and that the cuts will not be as drastic as moves other hospital systems and academic medical centers are making. But "some number" jobs will have to go — on top of more than 300 people recently terminated — either voluntarily through an early retirement plan or by outright layoffs and not filling open positions. Most of those cuts will come from support and overhead departments rather than caregivers, but Balser emphasized all areas will be scrutinized.
Helping steer the cost-cutting program beyond staff issues and into workflow, supplies savings and contract management are consultants from McKinsey & Co.
"While we are accustomed to doing many things 'our way,' there are tremendous cost savings opportunities in standardizing and simplifying a host of systems and services many of us use on a daily basis," Balser wrote. "We must take advantage of as many of these opportunities as possible in all sectors of the organization — clinical, research, and education."
VUMC will in the coming months also roll out a new paid time off policy that throws vacation, personal and sick days into one big bucket. Balser said the plan, which will become effective Jan. 1, will provide employees with more flexibility while simplifying administrative processes.
"We must go the extra lengths to support one another as we engage the many operational and emotional challenges that are inevitable during an industry-wide restructuring of this magnitude," Balser summed up. "And as we experience together what we all recognize are new and stressful circumstances, we must also see this as a time of opportunity, to innovate and become far more efficient and effective than ever before."
Click here to read Balser's latest letter to his team.