SVMC Implements Fiscal Recovery Plan
For Immediate Release
May 7, 2009
Contact: Kevin Robinson
BENNINGTON, Vt. — The Board of Trustees, CEO Dr. Mark Novotny and senior management of Southwestern Vermont Medical Center (SVMC) have formulated a comprehensive plan to jumpstart the hospital’s return to financial health. The program is the result of a measured, comprehensive review of the hospital’s management practices and operations.
“SVMC is projecting a 2009 operating loss significantly higher than management’s initial $1.3 million projection,” said Dr. Novotny. “Over the past few weeks, it has become clear that major changes to hospital operations are needed. SVMC’s overall financial condition remains fundamentally sound. However, we must adapt to a continually changing environment so that we may continue to provide the high-quality health care services our community deserves and our mission requires.”
The program announced today to hospital staff contains cost-saving measures that include a reduction in force of approximately 60 employees and reduced work hours for about 30 additional staff. A total of 18 currently vacant positions will not be filled. The reductions occurred throughout the hospital. In addition, last week SVMC reduced its senior management team by 25 percent.
"We are very grateful for the services of all these employees," Novotny said. "And we wish them well in their future endeavors."
The hospital is providing transition services including financial assistance, COBRA reimbursement for medical and dental expenses, access to the Employee Assistance Program, and assistance with résumés.
“The decision to reduce staffing was extremely difficult. But it was necessary to bring the hospital’s operating budget into balance,” explained Dr. Richard Guerrero, chair of the SVHC Board of Trustees, in a statement to staff. He noted that the hospital had implemented a number of cost-saving measures over the past few months in a concerted effort to prevent a broader workforce reduction, including:
- a freeze on planned capital projects
- the elimination of incentive compensation for senior management
- a reduction in sick and vacation time accrual for management and staff
- the elimination of most conferences and travel and cancellation of several internal events
- a renegotiation of contracts and a reduction in program expenses and equipment.
SVMC is one of many hospitals nationwide struggling financially. Cisco, a healthcare consulting group in San Jose, projects that 40 percent of US hospitals will end the year with a loss. The American Hospital Association (AHA) reported in April that half of the hospitals nationwide have reduced staff in recent months, and 80 percent have cut expenses by reducing hours, cutting benefits and reducing supply costs — strategies that SVMC has already adopted.
A comprehensive, mid-year audit currently being conducted by an outside accounting firm is expected to be completed in late June. “However,” Dr. Novotny said, “our expenses continue to exceed our revenue, so we cannot wait until June to make changes. We needed to take strong actions now.” He noted that the fiscal recovery plan makes long-term changes to help management restore the hospital to sustainable financial health.
Dr. Guerrero also voiced the hospital board’s “complete confidence” in the leadership of the hospital’s CEO, Dr. Mark Novotny, and his management team. “Their prompt and decisive response to these difficult circumstances gives us confidence that this recovery program has put the hospital on the road to a sustainable financial future.”
“Throughout its 90-year history, SVMC has enjoyed a well-deserved reputation for clinical excellence. Our commitment — providing high-quality medical care to our patients in the many communities we serve — remains unchanged.”
Southwestern Vermont Medical Center is a 99-bed community hospital serving Vermont residents in Bennington and Windham counties, New York residents in neighboring Rensselaer and Washington counties, and northern Berkshire County in Massachusetts. It is Vermont's only Magnet hospital for nursing excellence and a member of the Institute for Healthcare Improvement. SVMC is part of Southwestern Vermont Health Care, a not-for-profit health system that also includes the Centers for Living & Rehabilitation, the VNA & Hospice of SVMC, and medical practices in Bennington, Manchester, and Wilmington, Vt.