Nursing not the place for hospitals to cut costs

Austin American-Statesman, November 16, 1993

The lead article in the Statesman’s Oct. 31 Business section about the problems facing Seton and its new CEO, Charles Barnett, really hit home. The article stated that budget shortfalls are forcing Seton to cut costs, and Seton administrators are focusing on nursing. Differential pay programs that have successfully served as incentives for nurses to work weekends and nights are being eliminated. Nurses in good standing who may have past counseling occurrences are being laid off.

The article pointed out that wages and benefits comprise 51 percent of Seton’s total expenses, and that the national average is 56 percent. Go figure. In my book that means Seton is doing better than its national counterparts in wage and benefit expenses. Seems irrational to look here for further cuts.

The psychology behind targeting nursing to cut costs must be based on the fact that hospital financial statements reflect professional nursing under the rubric “operating expense.” But please, let us be ever mindful of the fact that, unlike physicians, these frontline caregivers do not have privilege to direct reimbursement for their services. And let us not overlook that this “expense” is human capital.

Seton administrators of days gone by considered their professional nursing staff, despite its position on the accounting balance sheet, to be an asset – a priceless resource worth its weight in gold to the hospital and to the community. Common sense dictated that if nurses were nurtured and supported, the patient would reap the benefits, and in fact this community has reveled in Seton’s quintessential nursing care since 1902.

Now that Seton is facing hard times, I think a lot can be learned from another of the 40 Daughters of Charity hospitals that underwent a similar experience in 1989 – Providence Hospital in northeast Washington, D.C. The Nov. 2 edition of MacNeil/Lehrer Newshour featured a Phyllis Theroux essay on Providence. This hospital lives the mission of caring for the needy and cares for a high percentage of Medicare and Medicaid patients. Although most hospitals operate at a two percent profit margin, in 1989 Providence was operating at minus 21 percent profit – mainly due to administrative problems, bad debt, poor contracts, various failing business ventures and too many opportunities for corruption.

At that time, Sister Carol Keehan took over as president and CEO. She ignored the advice of corporate America to cut employees and services. Instead, she went to the staff and not only assured them no one would be fired except as a last resort, but also solicited their advice on how to turn things around. Hospital revenues went up through prudent management, bulk purchasing for everything from supplies to insurance, patient billings and various fund-raising drives. Marketing money was used to provide free valet parking so that the elderly would not have to walk alone through long parking lots. As a not-for-profit organization, there were no stockholders to reward, and income was plowed right back into patient services.

Sister Keehan had a commitment to doing the right thing, and Providence is prospering. The staff have a new sense of teamwork and believe in what they doing, which is to treat people right because it’s the right thing to do.

Good luck, Mr. Barnett, in your quest to keep Seton solvent during these changing times. And go easy on nursing; after all, Seton and its nursing staff have been one of this community’s greatest assets for nearly a century

Toni Inglis, MSN, RN CNS (retired), FAAN, a lifelong Austin resident and retired neonatal intensive care nurse and editor of NursingNews, writes a monthly opinion column for the Austin American-Statesman editorial page.