Originally created 04/17/99

MCG Health to cut $22 million



While MCG Health officials can envision a new era of efficiency and cooperation with other providers, hospital and clinic officials must first carve $22 million from next year's budget.

At a meeting Friday of MCG Health's board of directors, hospital administration laid out a possible plan for the cuts, including:

An average 10 percent rate increase, which officials said would leave the hospital among the cheapest in the area while earning an extra $7.8 million;

An early retirement package, which could save anywhere from $3.5 million to $10 million;

Chopping management positions and expanding responsibilities, which could save anywhere from $800,000 to $2.5 million;

Reorganizing the outpatient pharmacy by establishing an approved list of drugs it would cover, and getting expensive cases like kidney transplants onto drug company programs that provide free or low-cost prescriptions. That would save about $2 million.

All of those changes still need to be approved by MCG president Dr. Francis J. Tedesco, the board or the University System of Georgia Board of Regents, said Patricia Sodomka, executive director of MCG Hospital and Clinics.

They would also fund a 3.5 percent merit pay increase in December, and add $2 million to attract and keep nurses, Mrs. Sodomka said.

Having come from other health systems where he once cut $25 million in a matter of weeks, the proposed plan is "very doable," said Donald Snell, president and chief executive officer of MCG Health.

The early retirement option would be one way of reducing personnel without going to more onerous methods, Mrs. Sodomka said.

"We wanted to be able to offer that option" before considering layoffs or other measures, Mrs. Sodomka said. Personnel cuts would make up about 40 percent of the reduction, said associate hospital director Thomas Kelly.

The rate increase would be the first in 10 years and in fact the rates were lowered in 1992, Mrs. Sodomka said.

Still ahead is some significant restructuring for the hospital, school and its Physician Practice Group, which collects and distributes physician fees and some benefits.

Mr. Kelly proposed that the board first sort out the funding, which is often intermingled, and define what pays for teaching, research and clinical care.

"We need to clean up the business relationship and align the incentives of the parties," Mr. Snell said.

For instance, an MCG physician may earn more by ordering more tests and keeping a patient in the hospital longer but the hospital generally receives a set payment based on the diagnosis, said Curt Steinhart, president of PPG.

"The longer you keep the patient in the hospital, the better you do but the worse the hospital does," Dr. Steinhart said. A system of leasing and contracting would provide a better system, Mr. Snell said.

Mr. Snell said a legislative committee set to look into MCG and a regional system of health care will aid that task, and other Augusta hospitals have shown some interest in cooperating.

MCG Health was reorganized last summer to take over operations of the hospital and clinics and Mr. Snell said that could happen in the fall after the legislative committee makes its recommendations.