March 23, 2007

Leadership meeting focuses on Joint Commission and budget updates

The MGH's recent Joint Commission survey and hospital finances were the major topics of a leadership meeting March 20 for managers, supervisors and department heads. MGH President Peter L. Slavin, MD, opened the meeting by providing an update on the Joint Commission accreditation survey that took place in December 2006. He explained that the MGH has been reaccredited, receiving 10 requirements for improvement (RFIs) on the final report, which the MGH received March 19.

Maryanne Spicer, director of MGH Compliance, provided an overview of the MGH's Joint Commission visit and subsequent actions. She explained that during the week of Dec. 11, the Joint Commission conducted an unannounced, five-day survey of the MGH. After this visit, the Joint Commission sent its preliminary report, which identified a number of areas for improvement. According to routine Joint Commission process, the MGH had the opportunity to respond to those areas that needed to be clarified or corrected.

Spicer explained that as part of this back-and-forth process, the Joint Commission thoroughly reviews all of the survey team's findings for technical errors and considers the points the hospital has raised. In the MGH's case, the Joint Commission agreed with most of the clarifications. An official from the Joint Commission returned to the hospital March 14 for a follow-up validation survey to confirm these clarifications. The MGH was then notified March 16 that it would be reaccredited and would receive a final report that would include 10 RFIs.

The next step in the Joint Commission process is for the MGH to file specific plans that explain how it is addressing or has addressed each of the RFIs, and the hospital is now in the process of putting together this information.

Gregg Meyer, MD, MSc, senior vice president for Quality and Patient Safety, followed Spicer by stressing that MGHers must "always be ready for the next patient" and should strive to be fully compliant with quality and safety standards and national patient safety goals at all times. He emphasized that the hospital's next unannounced Joint Commission survey will take place within 18 to 36 months from December 2006. Meyer also explained that in conjunction with the MGH's quality and safety agenda, a sample of patient charts now is being audited weekly. Beginning in April, any charts found to contain unacceptable abbreviations or lack dates or times must be corrected by the appropriate clinician.

Sally Mason Boemer, vice president of MGH Finance, discussed the MGHÕs financial performance to date and provided an overview of preliminary fiscal year (FY) '08 budget projections. Currently, the operating margin of $29.4 million exceeds the budget by $14.9 million. This is driven by strong volume, particularly inpatient, strong payment rates and royalty revenue. Expenses are running slightly over budget even though not all new programs and positions have been ramped up.

Boemer also explained that the future outlook for several key budget drivers — volume, expense management and revenue/payor rates — presents some opportunities as well as some challenges. Volume is predicted to be good for FY '08, although capacity constraints could become a factor. The revenue/payor rates outlook appears fair-to-challenged, as local payor contracts and payments from public payors could be lower than in prior years and in some cases lower than inflation. The expense management outlook also appears fair, according to Boemer, who described possible expense pressures on supplies as well as the need for competitive programs to support the MGH workforce.

Finally, Boemer shared that MGH Finance has calculated a preliminary but sizable budget gap with key assumptions including inpatient and outpatient volume growth and an increase in full-time equivalents (FTEs), benefits and inflation. She explained that a significant portion of the forecasted gap could be addressed using a detailed budget process for analyzing growth assumptions, payment rates, expenditures and
inflation. "The preliminary budget gap will help to focus our attention on the reality that the rate of expense growth will need to slow down," she said. "We need to acknowledge that there are possible tradeoffs to decrease the rate of expense or FTE growth to fund other positions related to direct care and strategic priorities." Despite this challenge, Boemer emphasized the positive message that the MGH will continue to grow its budget and the size of its workforce, just not at the same pace as in prior years.