Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 25, 1993 TAG: 9307230019
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: LEIGH ALLEN STAFF WRITER
DATELINE: LENGTH: Long
She and her co-workers began working overtime to keep up with their jobs; but the hospital adopted a policy of "approved overtime only" and told employees they had to make it all fit into an eight-hour day.
Then she began noticing other changes at the hospital: more part-time employees, no more employee discounts at the hospital cafeteria and fewer paid vacations.
She left her job in frustration but returned a few months later when she realized her hospital wasn't the only employer cutting back.
The woman spoke to a reporter only if her name is not used because she feared losing her job.
Faced with public demands for action on the nation's health-care crisis, and, for the first time, with a president promising drastic reform, the medical industry - from huge hospital systems to family doctors - is retrenching.
For the Roanoke Valley, where more than 11,000 people earn their livings providing health services, the industry appears to have hit a plateau: Job growth has halted for the first time in more than 20 years.
"We're not hiring except in specialized areas," said Lewis-Gale Hospital President Karl Miller. "It's happening to the entire industry. Everyone's waiting to see what this Clinton plan is going to do."
According to the Virginia Employment Commission, not a single health-care job has been added in the region since June 1992. That means for first time since the state began keeping records in 1970, Roanoke's health-care industry has gone 12 months without any growth.
Just three years ago, health care provided the Roanoke Valley with hope of stability in an economy perched on the edge of a recession. With manufacturing, retail and white-collar management jobs set for sharp declines, health care showed real promise.
It was considered the engine that still held the promise of steady, long-term growth.
In fact, health care avoided the clutches of the recession and maintained its position as the valley's largest employment sector outside government.
And until this year, the prospects for further growth were good. In 1990, The VEC reported health care would account for 11 of the 25 fastest growing job areas in Virginia by 1995.
But those predictions won't prove true.
For outfits such as Roanoke's Carilion Health System, Virginia's largest hospital company with more than 9,000 employees, two things went wrong at once.
The first happened in Washington: A new president and first lady took office with their eyes on a massive reform that will change the way everyone in health care does business. The second is a result of medicine's own success: Advances in drugs and technology have reduced the need for labor-intensive, inpatient hospital care.
"There's no doubt change is going to be painful," said Houston Bell, president and CEO of Roanoke Memorial Hospital - the largest of Carilion's units with about 2,500 employees. Under the threat of hard times, Roanoke Memorial is retrenching in the same pattern as many U.S. companies in the past few years.
Bell talked about the hospital becoming more "cost-conscious" and "less bureaucratic," words that were once rarely heard around big medical centers riding a wave of expansion.
"We're looking at every area to see where we can do things better, more efficiently," Bell said.
After Community Hospital of Roanoke Valley became part of Carilion in 1991, more than 12 departments and service areas at Roanoke Memorial were merged with operations at Community. The mergers saved Carilion money by eliminating duplicate services but cost some employees their jobs. The company won't say how many.
Now, it's not just employees in hospitals who are fearing the pinch. Many physicians in private practice say they will be forced to cut their payrolls if the Clinton plan reduces doctors' fees.
One Roanoke physician has three full-time employees at his surgery clinic. He said he would fire at least one of those people, and possibly move into a smaller office, if the Clinton plan lowers his fees without bringing down his operating costs, such as malpractice insurance and supplies.
That physician, who declined to speak for attribution, said he is afraid that doctors will get a particularly bad deal from the Clintons because there isn't a single physician on Hillary Clinton's 600-person health-care task force.
A doctor's ability to maintain and expand his payroll is directly related to how much he can charge patients, he said.
Dr. Andrew Roth, a plastic and reconstruction surgeon in Southwest Roanoke, said the uncertainty over how a standardized physicians fee scale will develop is hampering expansion of his practice.
He said he's so busy that he would like to take on a partner. But uncertainity about his ability to set fees makes it a financial risk and delayed his decision.
"It's impossible to tell a prospective physician who comes to the area what to expect in the way of salary," Roth said.
That's why Dr. Jack Ballinger, president of the Roanoke Valley Academy of Medicine, said he believes physicians should be allowed to collaborate in setting a standardized fee scale, something that now is illegal.
"We just want everyone to be playing on a level field," Ballinger said. "Somebody is going to set these scales, the government or us. All physicians hope is that they have a say in what the scale will be."
Hospital administrators and physicians say they are optimistic that once the dust settles from a Clinton-administration plan, hiring will resume, even if at a slightly less vigorous pace than over the past two decades.
The idea is that hospitals are cutting costs now in order to be more competitive in a system of government-managed health care, if that's what eventually comes from the Clinton plan. Once they know exactly what the plan will entail, hospital managers believe they can put themselves in a position to profit from it.
That's because under a new, government-sponsored insurance plan, Carilion could hope to see a reduction in the $60 million that it writes off every year by treating patients who can't afford to pay for its services. That, combined with growth among the number of older Americans, people in the age group who consume much of the health services, makes administrators such as Bell confident that hospitals will emerge from the Clinton plan in good shape.
That is, he said, "if we don't panic."
Carilion's chief financial advisor, Donald Lorton, said the lack of a comprehensive national health-care system is to blame for the disjointed nature of health-care companies offering a patchwork of inefficient services. "We've built reams of bureaucracy around this fragmentation," Lorton said.
And the government is telling hospitals that this excessive management will be one of its first targets when the health-care reform package finally comes down the pipe. Hospitals already have begun making some cuts, hoping to do themselves now what someone else will certainly do for them later.
The challenge, they say, is to cut in areas that won't compromise patient care.
As of yet, the ax hasn't fallen too deeply on any one part of Carilion's work force because the company doesn't know exactly what the Clintons have in mind. "It's tough to deploy your defenses in any one direction when you could get attacked from 360 degrees," Lorton said.
Carilion says it has about 300 fewer full-time employees now than it did a year ago, with the cuts coming from a variety of positions.
While highly paid doctors may be the first to feel the impact under a government-managed health-care system, the change could quickly mean hiring freezes and salary roll-backs for mid-ranking hospital employees.
The most recent available figures, from an American Medical Association study in 1990, indicated that doctors in the mid-Atlantic region earned $169,000 a year, on average. The salaries ranged from $98,000 for general practitioners to $251,000 for surgeons.
Lorton said hospital salaries for nurses, technicians and therapists range from $20,000 to $40,000.
Those hospital employees already are becoming victims of their own success at delivering a level of care that means people are spending less time in hospitals. As a result, home health-care services and outpatient surgery clinics are segments of the industry still growing at healthy rates - 15 percent to 20 percent a year in some cases.
Health-care centers such as the Lewis-Gale Clinic in Salem, now use new technology to treat patients faster and with fewer human resources than it did a few years ago.
Dr. Bruce Hagadorn, the medical director of the clinic, said gallbladder removal or hernia repair at one time required a lengthy and expensive hospital stay. Those operations can now be done using a laproscopic surgery procedure that makes three tiny incisions instead of one large cut. Patients generally go home the same day the procedure is done.
But that's bad news for hospital employees who make a living helping patients recover after such operations.
To respond to a growing demand for these and other same-day procedures, the Lewis-Gale Clinic this summer is adding 15 physicians to its medical staff, bringing its total to more than 125 doctors. That kind of growth is reflective of the national trend moving away from hospital care, the clinic said.
But Lewis-Gale employees aren't immune to the clutches of standardized medicine. The clinic now employs more than 50 people to handle the paperwork generated by a complex insurance, credit and billing system.
But the Clinton proposal includes standardizing insurance claims forms, meaning staffing in Lewis-Gale Clinic's business department - and many business departments like it in Roanoke Valley hospitals and clinics - could be reduced.
Standardized forms would allow for an electronic filing system that eventually would save the Lewis-Gale Clinic money but mean a smaller business staff, said clinic business office manager Don Mundy. Those job reductions would come from attrition rather than firings because the system would be integrated over enough time to train workers in how to use it, he said.
That's a common problem facing many health-care providers as shifting needs of the industry leave some departments with nothing to do while exposing staffing shortages in other areas.
Consider home health care.
Curtis Mills, who is in charge of Carilion's home health-care division, said he has been hiring about 20 people a year to keep up with the demand for his services. He said Carilion now cares for almost as many patients in their homes as it treats in its hospitals.
Mills said home health care is "labor intensive" rather than facility and equipment intensive, something that can save patients 25 percent to 50 percent over the course of a long illness or recovery.
There's no easy way to jump-start employment in the health-care field when health-care providers - from private physicians to hospital managers - agree that maintaining past rates of expansion will be nearly an impossible task in the coming months.
The challenge, industry leaders said, will be to shift resources to meet demands of change without sacrificing patient care.
by CNB