Wake Forest Baptist Medical Center Reengineers Cost Structure, Eliminates Positions

November 14, 2012

Wake Forest Baptist Medical Center began a journey in 2009 toward accountable, value-based care through the implementation of a series of transformational initiatives outlined in a multi-year strategic plan called A Roadmap to Excellence. To ensure continued strength, the Medical Center is proactively and aggressively reengineering its cost structure, operating model, quality and overall strategy. The Medical Center owes it to its patients, its employees and its community to provide the highest quality patient care and leading edge research in a fiscally responsible manner. All of these activities are designed to position the institution for success aligned with the challenges of health care reform, federal budget deficits and a decline in research funding from The National Institutes of Health and private industry.

Both federal and state governments, businesses and the American people believe the cost of health care in this country is neither affordable nor sustainable. Even with expansion of health care coverage to the uninsured, industry experts expect at least a 10 percent reduction in reimbursements to health care providers in the next two to three years. Declines in federal research funding are also expected as part of efforts to reduce federal deficit spending.

Wake Forest Baptist is committed to reducing its costs in order to make health care and the overall enterprise more efficient and affordable. At the same time, it is even more committed to improved quality, safety and service, patient-centered care, pioneering research, training the next generation of medical leaders and commercializing discovery and intellectual property.

Many industries have simultaneously lowered costs while increasing quality, but it is not possible to lower costs without increasing labor productivity. The Medical Center has measured its resources and productivity against other high quality, academic medical centers to help determine the best cost structure. The goal of the Medical Center is to be in the top quartile of academic medical centers in labor productivity by June 30, 2013, the end of the fiscal year.

Wake Forest Baptist is already well-engaged in this process. Expenses have been reduced, discretionary budgets tightened and process improvements are underway. But the main component that drives its cost structure is staffing levels. Almost two-thirds of the Medical Center’s total costs are labor.

After a long and careful review of current staffing levels across the organization, the Medical Center has determined what it must do to achieve top quartile productivity and quality. Sadly, the institution must eliminate approximately 950 full-time equivalent positions (FTE) within the Medical Center by June 30, 2013. About 50 percent of these FTE eliminations will be achieved through deletion of vacant, temporary and contract labor positions, as well as normal attrition and retirements. Consequently, there may be as many as 475 currently filled employee FTE positions eliminated by the end of June. Some of these positions will be reduced through attrition during the coming months. This number, 475, represents about 3.5 percent of the workforce. This change will not affect nurse-to-patient ratios, the quality of patient care or the pioneering research that is occurring at Wake Forest Baptist each day. About one-third of the reductions will come from corporate services and administrative areas.

This week, as part of the transition, 76 Wake Forest Baptist employees are being laid off. Those employees will continue to receive their full pay and benefits through January 4, 2013, when their severance benefits will begin. Toward that end, Wake Forest Baptist is committed to helping these employees in their job search and has arranged for outplacement assistance to provide guidance with resume writing, networking and using social media.

The remainder of the positions will be eliminated in the third and fourth quarters of this fiscal year. During this transition, strategic hiring continues at Wake Forest Baptist. For the past eight months, many positions opened through normal attrition and retirement were posted only internally to allow displaced employees the opportunity to transfer to these jobs, with re-training if necessary.

Wake Forest Baptist would like to take this opportunity to publicly thank each and every one of these employees for their dedication and their service to the institution and to the larger community.

Media Relations

Chad Campbell: news@wakehealth.edu, 336-713-4587

Bonnie Davis: bdavis@wakehealth.edu, 336-713-1597