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Duke Hospital Trims Positions; Expects to Find Jobs for All Affected

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Duke Health News 919-660-1306

DURHAM, N.C. - Duke Hospital officials Wednesday notified 94 employees who do not provide direct patient care that their positions are being eliminated and that they will be offered comparable open positions or training for different jobs. In addition, another 76 slots that now are vacant also will be eliminated.

"The action is one of a series of cost-reduction initiatives and efficiency enhancements that will position our institution for success in today's challenging financial environment," said Michael D. Israel, chief executive officer of Duke Hospital. "We are looking at all possible ways of enhancing our efficiency to ensure the continued high quality of care we provide our patients as well as the longevity of our organization.

"Decreased reimbursements for clinical services compounded by the effects of decreased Medicare reimbursements are creating financial challenges like never before. We must deal with the economic realities of the world in which we live. We have met such challenges before, and we will do it again to create an even stronger Duke University Health System."

The reduction of 170 positions resulted from a thorough evaluation of hospital operations and represents about 2.8 percent of the hospital's 6,000 authorized jobs.

"Our goal is to find other, comparable jobs for these employees within two months, and this is a very high priority for us," Israel said. "Each affected staff member has a personal transition coordinator assigned to help him or her who will help find another position within the health system or the university and medical center. We are committed to finding alternate positions for the affected employees. We may not be able to match all of the employees, but we're going to make every effort to do so. This includes offering training to staff to prepare them for a different position."

The cuts follow the announcement last month of an effort throughout the university and health system to save millions of dollars by lowering the costs of supplies. The "procurement initiative" is focusing initially on three areas - office supplies/equipment, clinical engineering/facilities and the hospital pharmacy. Other efforts also are underway to reduce expenses throughout the health system.

"Our physicians and staff are working together to improve patient care as well as to reduce inpatient costs and these efforts already are netting positive results," Israel said. "However, because half of our expenses are labor-related, we must also look at ways that will reduce costs in all non-patient care areas."

The pressures are not unique to Duke Hospital. The nation's academic health centers, particularly those not supported by state tax subsidies, are facing severe budget pressures from a price squeeze by managed care companies plus major reductions in Medicare reimbursements resulting from the Balanced Budget Act of 1997. By the time the federal cuts are in full force, they will have a five-year, $170 million impact on Duke Hospital, Israel said.

Similar pressures are having an even more serious impact on other teaching hospitals. The University of Pennsylvania Health Services System lost more than $300 million over two years and Georgetown University Medical Center lost almost $120 million over a two-year period, according to the Chronicle of Higher Education. Brigham and Women's Hospital, a chief training hospital for Harvard Medical School students, lost $15 million in the first quarter last year despite sharp cost cuts.

The Association of American Medical Colleges estimated last year that by 2002, cuts in Medicare required by the Balanced Budget Act will result in $14.7 billion in lost revenue for teaching hospitals.

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