True north

Emory Healthcare President and CEO John Fox shares his strategy for steering the course through two storms - the great recession and health reform.

By John Fox

Each year on September 1, a new fiscal year begins at Emory Healthcare, and this year was no exception. Our plans were in place to provide the infrastructure and resources to serve the thousands of patients we see each year and support our 10,000 employees as well.

But September 1, 2008, brought unprecedented challenges to our system and to others across the nation. As financial markets began to implode in September and October, 2008, we found ourselves with operational plans for an economy that no longer existed. An immediate effect was a drop in the financial assets of Emory Healthcare (EHC) and in our investment portfolios. In the background, a bigger issue was looming—unemployment. When the economy tanked and banks began to fail, residential construction stopped. Layoffs followed not just in construction but also in retail, manufacturing, and other sectors. Georgia’s unemployment went from below 4.3% to now around 10.5%. 

The calamitous drop in jobs had a dramatic impact not only on our patients and their families but also on our employees and their families. In Georgia, we saw more than 500,000 people added to the ranks of the uninsured. And of those who still had jobs, many were seeing their insurance benefits downgraded from a PPO to an HMO or to plans with impossibly high deductibles.

In light of this new economic reality, EHC was facing a projected budget shortfall of $50 million in FY 2009. That is a lot of money in anyone’s bank account and certainly an amount that would damage EHC’s goal to provide the best health care for patients. It costs $4.5 million a day to run EHC, and a disruption of our cash flow threatens liquidity and our ability to meet our mission. To soften those dire predictions, we had to work quickly to create and implement a new plan of operation. 


Our employees, from nurses to lab techs and maintenance workers,
had hundreds of ideas for how to
cut costs and save money.


The day after Thanksgiving 2008, the EHC leadership group met to discuss a strategy. How could we preserve our first mission of quality patient care, given substantially less revenue coming into the system? How could we preserve as many jobs as possible? We started with some ideas to reduce costs—controlling our hiring for nonessential positions, potential changes to fringe benefits, and rebidding contracts, for starters. We knew we wanted to keep any cuts as far from patient care as possible. The executive team agreed to accept no pay increases in FY09, and we cancelled incentive plans for the leadership to align ourselves with the same realities of our employees.

I then took the challenges EHC was facing and our ideas to all of our employees. After presenting the situation directly to more than 300 employees and soliciting ideas from all 10,000, I was astounded by the response. Our employees from nurses to lab techs and maintenance workers, had hundreds of ideas for how to cut costs and save money.  I learned things I never knew about our operation, down to the cost of plants in every planter in every hospital. Nurses suggested going to wireless computing, enabling us to disconnect many of our telephone landlines. Employees were willing to cash out their vacation time in new ways that saved more money.

The implementation of these hundreds of ideas had an impact that I would never have predicted when all of this started. Our employees essentially salvaged our year, and EHC ended FY09 in the black,
$4 million ahead of budget. We plowed that surplus back into investments in infrastructure to upgrade our IT system, to purchase necessary equipment to keep our enterprise sound.

It was the culmination and implementation of these ideas that saved hundreds of jobs and allowed us to forgo any salary reductions for employees. Unlike other hospital systems in Atlanta and the nation, we were able to maintain our workforce. Only in preparing for FY10 did EHC have to reduce any jobs, which we were able to accomplish largely by attrition. In the end, only 22 people experienced layoffs, and I am happy that more than half of those have found work, some back in different positions in EHC. My goal is to work with all of the rest of these valued employees to find jobs for them too.

Also, unlike other health systems and other businesses in America, we have continued to grow during the recession. EHC is handling more patients each year, and although many more of those patients are uninsured, this increase in volume is allowing us to continue to be solvent. One of our newest hospitals, Emory University Orthopaedics & Spine Hospital, is doing quite well with its emphasis on patient- and family-centered care. We expect The Emory Clinic to grow by 10% this year. We also will have the advantage of implementing a full year of employee ideas for FY10, doubling the number of months of implementation in FY09. 

Another silver lining of our new approach is the elimination of the use of agency nurses in EHC, something we have been trying to do for years. It makes sense to have our nurses with us, full-time, for the long term. As staff nurses, they learn our systems and our computers, and that translates into efficiency and better patient care.

In these challenging economic times, EHC has to remain fiscally healthy to keep its patients healthy. We have to protect the organization so we can protect our ability to provide health care. 

We are now caught between two storms. The Great Recession seems to be leveling off, although unemployment most likely will remain high for some time to come. The second storm on the horizon is health care reform, which will have as yet unknown impacts on the health care industry for at least a decade to come.  

During the first storm, EHC proved to be an organization that could flex and adapt to change. We will hold to thepath as health care reform brings more challenges and changes. No matter, we have leadership and employees to hold the course to fulfill our mission. Patients have always been and remainour true north. —John Fox

John Fox leads the Emory Healthcare system, the largest and most comprehensive health system in Georgia.EHC employs more than 10,000 people and encompasses Emory University Hospital,EUH Midtown,Wesley Woods Center (which includes a hospital for geriatric and chronic care), Emory University Orthopaedics & Spine Hospital, The Emory Clinic, the Emory-Children’s Center, and joint venture(Emory-Adventist Hospital, Emory Johns Creek, and Emory Eastside).

Table of Contents

Emory Health - Winter 2010