How Scripps Health Has Stayed Layoff-Free
Chris Van Gorder, president and CEO of San Diego-based Scripps Health, is an outspoken proponent of retaining employees. He has a well-documented "no layoff" philosophy for his system of five hospital campuses and 26 outpatient facilities, which he has held since he took the helm at Scripps in 2000.
"Once we hire someone, we have an obligation to them. We expect people to be loyal to the organization, but many organizations aren't loyal in return to their people," Mr. Van Gorder says. "A layoff is a management failure."
However, having a no layoffs philosophy is much easier said than done, especially in today's turbulent healthcare landscape. A combination of forces — including the federal sequester, reimbursement cuts, lower patient volume and an increase in bad debt — have led many hospitals and health systems across the country to institute layoffs.
So how does Mr. Van Gorder continue to lead Scripps without laying off employees? Here, he walks through the steps he continues to take that allow him to stay true to his management philosophy.
Scripps started the process of redesigning its delivery systems more than 10 years ago, well before the Patient Protection and Affordable Care Act existed, as Mr. Van Gorder strove to "design the delivery system of the future." Scripps has continued to change and — with Mr. Van Gorder's guidance — employees' job descriptions are changing along with it.
"Every employee's job is going to be different going forward," Mr. Van Gorder says. To help employees change with the industry, Scripps established the Career Resource Center for its employees in 2002. Whenever an employee's job is impacted by changes made in the Scripps' delivery system, he or she is placed in the career center for 90 days with full pay. During that time, the employee is coached by employment counselors and retrained for new positions in the system.
Scripps has put 882 employees through the Career Resource Center, according to Mr. Van Gorder, and of those employees, 92 percent still are employed in the system, with the other 8 percent choosing to leave on their own or retire. "We can assure [employees] that if they are willing to change with us, you have a position for you," he says. "The point is, the greatest asset [we have] is our people."
In addition to being a great way to value employees, the Career Resource Center saved Scripps $637,050 in avoided severance pay in 2012.
Cutting variation and waste
While valuing and supporting current employees through healthcare's changes is an effective way to retain high-performing employees, many healthcare systems and hospitals have had to lay employees off due to financial pressures. Scripps is not immune to these pressures, but has been able to save $77 million in financial year 2011 and $64 million in financial year 2012.
Most of these savings have come from identifying non-value-added variation and sending in a team to reduce the variation by creating evidence-based standardized processes. Scripps reduced variation in both nonclinical and clinical departments. "We looked at operational teams and redesigned how they do their work and asked physician-driven clinical teams to standardize and take costs out of that piece," Mr. Van Gorder says.
For example, Scripps created a new organizational structure in its pharmacies to reduce variations and waste. In three years, Scripps saved $14 million in its pharmacies by centralizing purchasing and renegotiation contracts.
Through valuing employees and cutting back on wasteful spending, Scripps has been able to stay financially viable and layoff-free, even during this trying financial time for hospitals. Mr. Van Gorder doesn't plan on changing that. Scripps' performance improvement goal for financial year 2013 is $66 million. "We're no doubt able to achieve it. We've done it all without layoffs and the goal is to continue doing that without layoffs," he says.
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