Layoffs Underway As DMC Preps For ‘New Normal’
DETROIT (WWJ) – Big changes could be coming to the Detroit Medical Center — including layoffs.
DMC employees talking to WWJ City Beat reporter Vickie Thomas say layoffs are already underway.
A source says there were nearly 200 layoffs in March, and the next wave will wipe out some members of upper management and trickle down from there.
Spokeswoman Andrea Taylor refused to confirm or deny that. She also would not comment on the possible elimination or consolidation of departments. But Taylor did provided WWJ with a statement that was sent out by DMC President and CEO Joe Mullany.
In it, he says the DMC is preparing for the “new normal.” Mullany says, because of sequestration, Medicare payments to hospital and physicians are being cute by 2 percent, and the state is reducing payments to hospitals, too.
Mullany says no exact numbers are known for the revenue reductions at the DMC — but he anticipates it will be in the millions of dollars.
The following is a copy of the letter, as provided by the DMC:
Message from Joe Mullany, CEO
Subject: 2012 Review, Reimbursement Changes and the Effect on the DMC
“Dear Employees, Physicians and Board Members:
The year 2012 was a year of unprecedented facility development and advancements in quality and safety for the DMC. Children’s Hospital of Michigan opened its new Specialty Center. The Rehabilitation Institute of Michigan opened its new Neurosciences floor, offering the most scientifically advanced rehabilitation medicine. Construction is well underway for upgraded facilities at Harper University Hospital, DMC’s new Heart Hospital, Detroit Receiving Hospital and Sinai-Grace Hospital.
Our quality reached new levels of success. We launched our High Reliability Organization and provided training to nearly 100% of our team. DMC hospitals were listed among the best in U.S. News and World Report. We were recognized by Healthgrades, LeapFrog, Robert Wood Johnson and Press Ganey amongst others for our clinical quality excellence.
I came to Detroit recognizing the tremendous successes the DMC had in the past few years, excited about the talent I saw on the teams, and most importantly, committed to the mission of the organization – “excellence in the provision of clinical care enhanced by education and research”. At the same time, I realize that in order to continue to do these amazing things, and remain true to our mission, we need to recognize that the playing field is changing. Things like healthcare reform, continued consolidation of systems, changes in technology, and, probably at the top of the list, the reality that the cost of healthcare in the US is too high, are all challenges we must accept and address.
Little did I know the challenge would be so swift and significant! Because of the sequestration, Medicare payments to hospitals and physicians are being cut by 2% and the State is reducing payments to hospitals like the DMC who treat a disproportionate share of the un- and under-insured this year. While exact amounts are still unknown, we expect DMC revenue reductions to be in the millions of dollars. I want you to know how the DMC is responding to these cuts. Just as many other major national medical centers with similar missions across the country are responding, DMC is focusing on proactive steps to prepare for our “new normal” future.
So what does this mean for the DMC? To answer this question you must focus on our mission – “excellence in the provision of clinical care enhanced by education and research”.
• Our largest issue is the provision of clinical care. DMC believes that access to quality health care is the right of every human being. We provided 7.3 percent more uncompensated care this year than we did the previous year. Some of the payments we receive from Medicare and the State to compensate us for our level of uncompensated care will be eliminated or reduced over time beginning this year.
• Our commitment to medical education makes the DMC a premier Academic Medical Center in the country. The challenge to maintain our focus on education will be critical. We expect to have some funding reductions this year and medical education will be under significant pressure for the next few years.
To fulfill our mission, we need to address the magnitude of these revenue reductions this year and in the next several years, finding expense reductions equal to our anticipated revenue reductions. Some of that work has begun, but much more needs to happen. Our leadership team is working with all employees and physicians to identify cost reductions and efficiencies. My commitment to you is they will be made in line with our mission.
My confidence is high that challenging times bring out the best in strong teams. And the DMC team is a very strong team. That strength is shown in our impressive quality and safety performance and that strength needs to continue.
My additional commitment to you is I will lead through these troubling times in a way not adverse to our culture. We will continue to treat each other with respect and integrity. Even as we need to make the inevitable difficult decisions that relate to programs and personnel, we will make the decisions with our culture in mind. Decisions will be respectful and our patients, physicians and employees will remain our top priority.
To all DMC physicians – now more than ever you need to know we are working hard to be there for you and your patients. In return, I hope you will remain loyal and supportive of us.
For the Detroit community – I want to be clear that we will continue to be there for you. In addition to this letter, the senior team and I will reach out to community leaders to make sure they know of our continued commitment.
I promise to keep you posted as we navigate this difficult but necessary journey. I believe this effort will make the DMC stronger and you will have my support along the way. Thank you for your understanding and continued dedication to our mission and values as we navigate through this together.”