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Dome - On Times of Challenge and Focus

Dome June/July 2013
Issue No. 646

On Times of Challenge and Focus

Date: July 5, 2013

Ronald R. Peterson
Ronald R. Peterson

Ronald R. Peterson

President, The Johns Hopkins Hospital and 

Health System

Executive Vice President, Johns Hopkins Medicine


In the April issue of Dome, you read about the formidable financial challenges facing us and the multiyear performance improvement initiative, known as “The Initiative,” which Johns Hopkins Medicine has developed to keep us financially healthy through this potentially rocky period. 

Let me recap those challenges for you:

  • Federal budget sequestration has begun, which could mean as much as a $71 million loss of revenue for JHM—$21 million from Medicare, $27 million in research grants and $23 million in federal managed care payments.
  • As we began to finalize the JHM FY14 operating budget, we encountered a $100+ million gap, resulting from a near-zero price increase for most of our hospitals and physicians, and a 2 percent inflation increase in our cost structure.
  • We have identified the need to realize at least $150 million to $200 million in performance improvements across JHM over the next several years to offset these revenue reductions.

As if these challenges were not enough, we are also facing major changes in the work environment, including the implementation of Epic, the common clinical IT platform that we hope will drive integration of our delivery system. As well, we must adjust to a variety of pay-for-performance imperatives, such as performance on increasing numbers of core measures. And we are increasingly gearing up for the emerging world of population health management.     

So indeed, after more than two decades of prosperity, the institution faces a period of profound austerity as well as opportunity for innovation and growth. We are using our strategic planning process as well as our budget process to ensure safeguards to shield us as much as possible from financial harm while identifying opportunities to sustain our cherished tripartite mission.  

From this 20,000-foot overview, I would like to bring things down closer to the ground, because nearly every day, colleagues come up to me and ask: What does this all mean for me? How are we going to get through this? What is going to happen to our institution? What is our way forward?

Some of these questions I can answer with authority; on others I can only speculate. What I can say with certainty is that, despite the pressures and the unknown, we will be all right if we keep our focus on what matters most—patient- and family-centered care, patient safety, service orientation, efficiency, innovation, training: in essence, the care and feeding of our mission. 

Yes, we will need to improve productivity, watch our overtime costs, become more efficient by standardizing our work processes, and reduce our level of spending. Achieving these objectives will require all of us to work harder and smarter. Although I realize that this could create stress and pressures, it will be imperative for all of us to maintain our civility toward each other and those whom we serve.

The good news is that we continue to have great demand for our services. So for the most part, we are not talking about loss of jobs if we are prudent with our resources and more productive in both patient care and non patient care areas. It also is worth mentioning that we are not anticipating salary cuts. In fact, we will have some modest pay increases, although they most likely will be held close to zero for our most highly compensated people. 

Because of what we do know about our financial outlook, and the uncertainties, I do not want to minimize the challenges facing us. What gives me solace in times like these is knowing that all of you do believe in our mission, or else you would not be here. I feel confident that Dr. Rothman and I and the rest of our leadership can count on you and that we can count on each other. Together, we will get through this and come out an even better and stronger Johns Hopkins Medicine.