"The Ronan Report" provides insight about the activities at the Western Maryland Health System in Cumberland, Maryland, and about the changes taking place in healthcare today from a CEO's perspective.

Friday, April 26, 2013

That Critical Dual Role for Hospitals in Maryland

So, in addition to caring for sick (the obvious role for hospitals), we are also economic engines across the State and in our communities.  We are one of the largest private sector employers in the State by employing around 100,000 employees.  There is then the ripple effect for every one hospital job, an additional two jobs are created outside of the hospital.  We generate a Statewide economic impact of $26 billion; at WMHS, our economic impact on the region is $300 million.  As an industry, we have to be very careful through spending cuts, zero rate increases, inflation and changes in how we do business, that the financial condition of hospitals in Maryland is at one of the lowest points in our history. 

WMHS is doing somewhat better than most Maryland hospitals this year, but that wasn't the case last year.  We had a very challenging year last fiscal year.  While insurers are asking for and in many cases receiving double digit increases, many Maryland hospitals are at a barely break even point.  To date, we have been able to sustain the cuts and the well below inflation rate increases through focusing on the greatest portions of our operating budgets which is "staff and stuff."  We have eliminated vacant positions, renegotiated supply costs and sought new sources of revenue, but you can go only so far. 

The current and continued weakening of hospital finances will likely lead to program and service cutbacks and an increase in layoff activity Statewide.  At WMHS, we are pulling out all stops to ensure that we are managing our financial situation through careful planning as was the case this time last year as we planned for the current year's budget.  Hopefully, the rate setting commission will get the message and allow hospitals to continue to act as the State's economic buoy during these challenging financial times.

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