Financial Forecast – Showers and Storms with Occasional Sunshine

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We don’t need a blog to tell us how bad the economy is, but perhaps a blog post can shed some light on the financial health of our Institutions and the Department of Pathology.  Fortunately, the impact to health care is projected to be less than other sectors of the economy.  Johns Hopkins Medicine is about where they budgeted to be at the close of Fiscal Year 2009.  The Hospital has had a significant positive margin, whereas other entities such as the School of Medicine, Bayview, and Howard County General have had a more challenging year.  Fortunately, Pathology has a positive budget outcome on the Hospital side and has met its University target as well.  The bottom line is, “How do we maintain our excellent patient care and research while retaining our employees in this economic climate?”

FY 2010, which begins on July 1st, will be another challenging year.  The Hospital and the University are planning for many unknowns.  While everyone will agree that our test volumes are still at all-time highs, there are lingering concerns that our ability to collect revenue for this testing will be unpredictable.  Additionally, donations are down.  Our endowments have taken financial hits as well.  Research funding is more difficult to receive.  What will Health Care Reform mean to our revenue stream?

In this climate what do we see for next fiscal year?  Institutionally, most large capital equipment purchases are frozen for a year.  Salaries will be essentially flat for next year.  The Hospital plans to limit salary increases to approximately 1%, while the University will hold to no increases unless the financial situation improves.  Small projects to reduce pagers, fax devices, unused phone lines, two-side copying, etc., will contribute to sizable savings across the Hospital.  Institutionally, Hopkins will continue to reduce its reliance on agency personnel who generally command a premium over traditional employees.

What can we do in our laboratories?  Supervisors will be looking closely at schedules to reduce overtime, an Institutional initiative as well  Some areas have increased their weekend frequency, resulting in less overtime.  Since we have had an excellent hiring season, we will be suspending sign-on bonuses for offers made after July 1st.   We will also review possibilities to bring new tests in-house that are currently going to reference laboratories.  (Immunology recently brought Vitamin D in-house, saving the Hospital $300,000 per year and providing better service to our patients.)   LEAN projects in the Core Laboratories at both the East Baltimore campus and Bayview will likely improve service while reducing expenses.  We are also forecasting nearly a 10% increase in Outreach Testing due to the addition of the new Howard County Medical Pavilion and a new JHCP site in Glen Burnie.  Your thoughts and ideas on more efficient processes will drive even more savings.

The Department of Pathology is poised to weather the financial storm.  In fact, the sun does still shine in the Department, we will have our annual picnic (without crabs) on September 13th.  We hope to get funding for several items of replacement equipment.  We will strive to retain our valuable employees and continue our mission of Clinical Service, Research, and Teaching.  With your help we should have another excellent fiscal year.  Thanks again for your continued assistance in making the Department of Pathology an efficient, cost-effective Department.

Al Valentine, Administrator for Clinical and Financial Affairs
Rosemary Hines, Director of Finance
Department of Pathology

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