Kronenberg: Crouse restructuring necessary given changes in health care

SYRACUSE  —  Crouse Hospital could not avoid restructuring given a current backdrop of  Medicare and Medicaid payment cuts, changes in government reimbursements, and new  technology, Dr. Paul Kronenberg, president and CEO, says after the hospital made changes including eliminating 100 positions.

“I think the main reason you do this is looking at the present and looking at the future,” he says. “It is quite clear that reimbursement support for hospitals, and really most providers, is going to be going down. So we said, ‘Let’s not wait until there’s some kind of crisis.’ ”

Crouse is staring at a $5.1 million reduction in government payments like Medicare and Medicaid in 2013 if sequestration (automatic spending cuts agreed to in the 2011 debt-ceiling talks) takes effect because the federal fiscal-cliff talks fail, according to the hospital’s budget projections. Even if Congress strikes a deal to avoid sequestration, the Syracuse hospital projects its government payments dropping by $3.4 million.

Crouse had not approved a budget for 2013 as of press time. But officials anticipate its budget growing slightly from $354.5 million in 2012.

Reductions in government payments in 2013 aren’t the only upheavals hospitals face, Kronenberg says. Efforts are under way to reduce hospitalizations, slash readmissions, and possibly cut emergency-room visits, he continues.

“One of the things that we have planned for is reducing the length of stay of our patients within the hospital,” he says. “As some procedures are shifted to an outpatient site, that’s another thing that will impact us in some way. We have a very large outpatient surgery program, so we’re very well poised for that.”

Crouse didn’t immediately turn to reducing employment levels when it started its cost-cutting and restructuring, according to Kronenberg. It looked at reducing its supply expenses — trimming those by nearly $3 million this year. And it is attempting to limit high-cost items by reducing duplicate testing and focusing on limiting complications for patients, which can be expensive for patient and hospital alike.

Ultimately, though, Crouse still faced pressure from rising health-care costs and increasing health-care expenses.

“You do all of those activities and see what’s left,” Kronenberg says. “In our case all of those efforts were not going to be sufficient. Our budget would not have positioned us for the future, known and unknown.”

So Crouse initiated two rounds of position cuts. At the end of October, it announced about 30 eliminations, then shared news of 70 more at the beginning of November. The first round of cuts included 24 management positions. The second round was more wide-ranging. It included 23 vacant positions but also 16 licensed practical nurse (LPN) positions.

Many of the positions cut in the second round were union positions, meaning some employees can exercise bumping rights and move into positions occupied by workers with less seniority. The bumping process lengthened the time frame over which the cuts played out, but all positions were slated to be eliminated around the end of November. Of the 100 positions eliminated, 55 workers are on a severance program.

The LPN cuts came amid technological changes, Kronenberg says.

“As you go to a different system of care involving the use of electronic medical records, the nurse taking care of patients now becomes the person — as opposed to the unit secretary — that needs to be able to take off the orders that are written into the electronic medical record,” he says. “That is outside the license of the LPN.”

Crouse also closed an outpatient diabetes program it operated at 305 Vine St. in the village of Liverpool as part of its restructuring. That center had four employees and hosted 752 patient visits in 2011.

Kronenberg stresses that the Crouse job cuts, which bring the hospital down to 2,230 full-time-equivalent positions, do not reflect a hospital that is losing patients. Between 2006 and 2011, its discharges grew 11.4 percent to 24,395, its outpatient cases increased 10.7 percent to 253,976, and its emergency-room and urgent-care visits jumped 19.5 percent to 66,741.

“You need to grow revenue and reduce your costs,” Kronenberg says. “You grow your revenue mainly by attracting physicians to practice at your hospital and patients to come to your hospital. It’s something that we’ve continued to work on.”

The restructuring was not tied to a recently announced agreement between Crouse and the city of Syracuse that has the hospital making $50,000 annual payments to the city for four years. The payments come amid a push by Mayor Stephanie Miner to generate revenue from tax-exempt properties. As a nonprofit institution, Crouse is exempt from property taxes.

“It was a discussion that the mayor actually started during the summer or before the summer,” Kronenberg says. “We made the decision at that time to do what we thought we could to help support the city. We made that commitment months ago. I didn’t think it was right to back out of that commitment.”

Contact Seltzer at rseltzer@cnybj.com