Dear Colleagues:
BWH senior leadership and our Partners Finance and leadership counterparts have completed the budget planning process for FY 2008, which begins Oct. 1. We’re not enacting some of the Draconian cost-cutting measures many of us endured in the past even though the financial forecast in the health care industry is not improving.
We face several challenges. The Center for Medicare Services expects budget cuts at the hands of a Congress and White House that have many interests competing for federal dollars. Our indirects from the National Institutes of Health are down or flat, and either way, NIH funding is well behind inflation. In Massachusetts, while health care reform promises to insure all Bay State residents in coming years, we will experience growing pains as we navigate this new course.
Additional revenue streams we count on cannot offset reductions elsewhere, and we are facing expense increases over and above inflation. Salaries and wages for staff across the board, coupled with pharmaceutical and device costs, are on the rise, and we are seeing the end of many of our favorable third-party payor contracts. This all comes as our GME allowances decline, as well.
The target margin for FY 08 at BWH is $81.7 million, or 4.5 percent, and when we look at the overall budget of Brigham and Women’s/Faulkner Hospitals, the margin increases slightly to 4.6 percent. Achieving these target margins will prove challenging.
Falling short of our target is not an option this year. Meeting these goals is necessary for BWH to complete the many infrastructure improvement projects underway, as well as our construction projects, such as the Carl J. and Ruth Shapiro Cardiovascular Center and the Mass. Mental Health building project, which is on deck. Investing in our future is not a luxury, it’s mandatory.
We’re fortunate to have in place dedicated and capable senior leaders in COO Kate Walsh and her team. They are working hand-in-hand with hospital departments to increase revenues by growing inpatient discharges and outpatient volume and keeping expenses in check.
We need your best efforts to meet these goals, and we are open to any new ideas to increase revenue and reduce costs.
Sincerely,
Andy Whittemore, MD
Chief Medical Officer