October 31, 1994
Media Contact:Gary Stephenson
Phone: (410) 955-5384

The Johns Hopkins Hospital is launching formally a reengineering process this month that is expected to involve hundreds of employees in a major rethinking of the way the nation's most highly rated hospital does business.

Pilot reengineering projects already in the works or recently completed are expected to save more than $1 million per year in operating room expenses and other services. One division alone projects savings of $5.5 million.

Inspired by these successes, achieved without layoffs, the Hospital will look at every aspect of its operations to improve quality and cut costs while minimizing any potential loss of jobs. The Hospital will be assisted by the health-care management consulting firm APM Inc. of New York, but Hopkins officials emphasized that they will control the reengineering process. "This is the hardest job we will ever do as an organization, but it is one on which our mission and our 7,000-person workforce depend," said James A. Block, M.D., president and CEO of The Johns Hopkins Hospital and Health System. "Reengineering focuses on the issues of access and cost, which are uppermost on everyone's agenda, along with our continued ability to recruit, train and retain a superior force of doctors, nurses, and supporting staff."

Block and other Hospital officials acknowledge that "reengineering" frequently is regarded as synonymous with staff cutbacks in the public's perception. But they stress that Hopkins' goal is to avoid or reduce to a minimum the loss of any jobs.

"Johns Hopkins always has been a leader, not a follower, in health care, and we intend to apply that century-long record of innovation to the process of reengineering no less than to clinical care," said Block. "Reengineering will be driven by the values that have been fundamental to Hopkins since its founding--values such as individual dignity, collegiality, high quality, innovation, and commitment to diversity."

"Like academic medical centers everywhere, we face the task of staying competitive in an aggressive local marketplace while carrying built-in costs related to education, biomedical research and indigent care that other hospitals don't have," said executive vice president and chief operating officer Gennaro J. Vasile, Ph.D.

"Insurers may be willing to pay some premium for Hopkins quality, but we also know that we must lower the differential. Reengineering is an opportunity to improve our competitive positioning while enhancing quality and service. We are determined to continue to provide the highest quality and the best possible value for patients and insurers alike."

Diane M. Iorfida, senior vice president for human resources and organizational effectiveness, said the reengineering effort will be led by a steering committee headed by Vasile and including representatives of senior management, hospital physicians, nurses and house staff.

In addition, work groups reporting to the steering committee in the areas of Clinical Goals, Customer Service, Care Delivery, Service Delivery and Financial Goals will include all categories of employees. They will set goals for quality and cost improvement by the end of November. In the following six months, design teams consisting of employees, physicians and volunteers will explore ways to meet the goals. In the third phase, from May until July, the Steering Committee will adopt recommendations and begin planning how to implement them.

Carrying out the recommendations will take place over three to five years, Iorfida said. Reengineering as a process will become an enduring feature of hospital administration at Johns Hopkins. "This is the way we want to manage, by constantly reinventing and refining ourselves. We will be improving all the time."

Iorfida added: "We want to emphasize that the creativity and insights of every employee will be invaluable as we go through this process. There will be literally hundreds of employees involved in the design teams. We are committed to use cross-training and retraining to maximize the contributions and potential of every employee. This is not a zero-sum game where one person's gain will be another's loss."

Iorfida said the Hospital administration has already notched several major successes from initiatives that illustrate Hopkins' approach to reengineering.

In one of the most dramatic examples, the Department of Orthopedic Surgery is projecting that it will save $5.5 million over the next five years from a decision to whittle the number of vendors serving the department from nine to three. In exchange for making the short list, vendors agreed to lower the prices they charged Hopkins.

After Richard Stauffer, M.D., the director of the department, informed the administration of the new arrangement, the administration decided to launch a pilot OR (operating room) incentive program, which awards groups of employees up to 50 percent of the money they save by suggesting workable proposals. The goal is to achieve a 3 percent reduction per case in OR costs.

In the Wilmer Eye Institute, three units--emergency, same-day surgery, and inpatient surgery--were reengineered into one. Costs have been reduced by more than 20 percent since the July 1992 merger. Nurses in the center had to acquire new skills in order to tackle a greater variety of tasks in their new unit, which has been renamed the Wilmer Nursing and Trauma Center. Although some positions were lost to attrition, no layoffs were necessary.

As an example of what retraining and cross-training can mean, Iorfida points to the medical records department, where nearly 130 employees are embarking on a five-year program to earn their accreditation as clinical documentation specialists and technicians. Many of them are now, essentially, file clerks. The retraining and upgrading will be accomplished without layoffs.

Iorfida says that reengineering will build on earlier quality initiatives at Hopkins. "Quality improvement means making gradual improvements over time," she said. "The difference between quality improvement and reengineering is the difference between taking baby steps and a quantum leap. Reengineering moves a lot faster, and the results are a lot bigger in terms of magnitude."

-- JHMI --
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