
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, September 20, 1994                   TAG: 9409230014
SECTION: BUSINESS                    PAGE: C-8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: DURHAM, N.C.                                 LENGTH: Medium

DUKE HOSPITAL REFOCUSES TO GIVE LESS-COSTLY QUALITY

For decades, Duke University Medical Center has attracted patients from around the world with its Rock of Gibraltar reputation. Its prices were high, but the quality care was worth it, many patients decided.

But with the bean counters pushing managed health care and putting less and less stock in status, Duke is being forced to reinvent itself, just like its less lofty counterparts.

``Managed care is making more and more inroads, and we're being paid less,'' said Michael Israel, chief operating officer at the hospital, which has about 8,000 employees and a $516 million expense budget.

In the next two years, the hospital expects to eliminate 600 to 1,500 positions and cut expenses by $70 million. To do that, Israel says the hospital is rethinking every department.

For instance, the department that provides sterile equipment to operating rooms and patient floors concluded it could operate with 32 fewer positions.

The hospital negotiated a contract with Baxter International, a major medical supply company, to cut costs on scalpels, clamps and other devices.

And a physician who runs one of the hospital's most expensive services - bone marrow transplants for breast cancer treatment - has cut the cost from $140,000 to $65,000 per patient by letting patients make their early recoveries in nearby motel rooms rather than hospital rooms.

Managed care programs are rapidly replacing traditional health insurance as a way to pay for medical care.

The programs sign up patients, usually through their employers, and charge a flat fee for full health coverage, rather than using the traditional - and usually more costly - method of filing an insurance claim for each service rendered.

``It's not just Duke, and it's not just teaching hospitals,'' said Jim Bentley, senior vice president of the American Hospital Association, a 5,000-member trade group. ``The whole health care delivery field is at the front end of reorganizing itself.''

Duke ranks with university hospitals at Stanford, Yale, Johns Hopkins, Georgetown and St. Mary's at the Mayo Clinic, Israel said, and wants to keep that distinction.

But it's competing locally for patient dollars at non-teaching hospitals that can deliver care at half Duke's cost.

Without changes, Israel said, Duke would have had a shortfall of $30 million this fiscal year and $57 million in fiscal 1996.

Under Duke's deal with Baxter, the two set target costs for supplies for various medical procedures. The plan encourages Duke to buy fewer supplies overall, but more of them from Baxter.

To recruit new patients into its health care network, Duke has opened clinics in neighboring cities and is buying family physician group practices.

by CNB