Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, May 20, 1995 TAG: 9505220040
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: LENGTH: Medium
Four to eight years out, the annual decline could be as much as $70 million to $134 million, and the company also hopes to trim costs to absorb that, CEO and President Tom Robertson said Friday at a news briefing to outline Carilion's new direction.
In fact, the briefing was part of the new direction, he said, because Carilion recognizes that its health is of special concern to the Roanoke Valley, where it employs 5,600 workers.
The greatest pressure to cut costs will come in the Roanoke Valley, Robertson said, because the system's outlying hospitals already have made changes to move from acute-care to multiservice facilities.
Carilion operates 13 hospitals from Farmville to Big Stone Gap, and employs a total of 7,300.
The company cut 375 jobs in the past year, all but a dozen by attrition. Robertson said he hopes attrition can continue to be the vehicle for cutting staff, but that he "wasn't going to say" there won't be any layoffs.
Robertson said he knows there is "a lot of anxiety about job security."
The restructuring and reduction of management jobs will be one of the first areas of action, he said. It might make sense, he suggested, to have one corporatewide manager oversee a service offered at several facilities rather than have a manager at each place for that service.
Carilion has from 300 to 500 managers, depending upon what criteria are used to classify them. Some don't supervise anyone.
Several management positions were not filled when employees left in anticipation of the need to downsize. Some of them could be eliminated, he said. Also, a job could be kept but not the management designation.
The only absolute Robertson gave was that both Roanoke Memorial and Community hospitals will remain open because neither is large enough to handle the patients of both. However, excess space in each will be looked at for nontraditional uses, he said.
Assuring that Carilion's "financial position is as strong as it has ever been," Robertson said it must wean itself from dependence on in-hospital patients because insurance companies continue to pressure for shorter stays.
On any given day, "half the hospital beds in the valley are empty," Robertson said. The average daily patient census at Roanoke Memorial Hospital, its largest, is down 15 percent from a year ago, he said.
And because 50 percent of Carilion's business comes from Medicare patients, the hospital census could drop even faster if senior citizens opt for health maintenance organizations as they have in states like Florida. HMOs, which closely monitor health-care use and costs, have been popular with senior citizens because they eliminate the need for a supplemental insurance policy that costs about $125 a month.
Robertson also said that Carilion can't expect its local market share to grow beyond the current 70 percent.
"All our facilities and training are geared toward in-patient. We need to refocus," he said.
Part of refocusing will include ridding itself of properties it does not need. A prominent one is Cherry Hill, a South Roanoke estate that once housed the Roanoke Valley's fine arts center. It is for sale for $1 million.
The hospital also owns several houses in the Old Southwest neighborhood, and some of them might be among the properties Carilion hopes to put on the market in the next six months, Robertson said.
For the past 21/2 months, about 75 employees have been on a steering committee charting the "course for change" with the help of Don Lorton, Carilion's chief financial officer, and William M. Mercer Co., international management consultants. Other employee groups heard their findings Thursday and Friday, and the strategy was outlined in a newsletter distributed to all workers.
Next week, teams of employees will be named to develop plans of action for making the cuts, with June 26 selected as the date to kick off the next phase, Lorton said.
by CNB