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KH may offer 2 percent employee raises

Contingent on hospital’s financial performance; final decision in December

Posted: September 12, 2014 2:11 p.m.
Updated: September 15, 2014 6:00 a.m.

KershawHealth may offer its employee a 2 percent raise effective at the end of the year. The decision will be influenced -- in part or in total -- by the healthcare organization’s “financial performance through the end of the calendar year and other factors known by year end to impact fiscal year 2015,” according to a summary of KershawHealth’s proposed Fiscal Year (FY) 2015 budget.

The KershawHealth Board of Trustees discussed the matter during its Sept. 8 meeting. The board is set to vote on the budget at its next meeting, set for a week from today on Sept. 22.

According to KershawHealth Executive Vice President and COO/CFO Mike Bunch, the proposed salary increase would add $682,157 to the budget. Physician salaries would also increase, by $72,383; employee benefits would increase by $50,554. With or without the increases, the FY 2015 budget predicts an operating loss. Without the increases, that loss would be nearly $1.115 million. With the increases, that loss would grow to more than $1.9 million.

Board Vice Chair Dr. Tallulah Holmstrom asked about exactly how the pay increase would work, if offered.

“Often, it’s the folks on the low end of the pay scale that it means the most to,” Holmstrom said. “It may be pennies on the dollar … but it’s impactful. Is there ever a time when an organization comes in and says, ‘We’re going to do an increase that’s “this much” for the folks who are making less and less and, maybe, none for the folks at the top end of the pay scale?’”

Interim KershawHealth CEO Terry Gunn said the number is actually a 2 percent “bucket.”

“What we want to do -- and we’ll probably share more later about a real methodology to make sure that those dollars are deployed strategically … to those it will mean the most to,” Gunn said. “You’re right, it’s not our intent to just go out and, all of a sudden, there’s an across the board 2 percent for everybody regardless of performance, regardless of position.”

Trustee Paul Napper expressed concern about raising employees’ expectations for the raise and then, possibly, not offering it.

“I think we’re on a real slippery slope when we put out that we’re looking at a 2 percent raise in January, contingent on certain things, and then we don’t give it to them in January. That’s going to be a morale buster,” Napper said. “To be honest, they may not get any raise this year, and I think that needs to be clarified and make sure they understand that. I know it would hurt me if I was looking at a 2 percent raise in January and spend everything on Christmas and not get any raise.”

Board Chair Karen Eckford suggested that when the budget is finally approved by the board, with the inclusion of the possible pay raise, that certain disclaimers be issued informing employees that it is contingent on certain financial performances. That seemed to satisfy Napper.

“I just want to make it very clear to our staff that if something happens and come January they don’t have that 2 percent, that we’re not all sitting here with egg on our face, even though we said that may not be the reality because some of them may plan on that,” Napper said.

Eckford said the fact that the administration and board is even considering including a 2 percent raise in the face of the challenges KershawHealth is dealing with shows that they value the staff.

“And we want to be sure that we do everything within our power to compensate them fairly and adequately. That, if and when there is an opportunity to do that, then, certainly, that’s something we feel like is a priority. I hope that message is what gets through,” Eckford said.

Trustee Eric Boland, however, said a 2 percent raise doesn’t mean much to employees whose hours are cut. Boland was referring to an earlier part of the budget discussion where he asked about a reduction in the number of full-time equivalent staff, or FTEs.

At the beginning of the discussion, Trustee Susan Outen asked about nearly $21 million worth of expenditures listed in the budget only as “other expenses.”

“I guess as I was looking at all this, and looking at our volumes, and I know from talking to staff, your ‘flexing down.’ You have to … but that seems like a lot of money for expenses and we need to cut them. We keep losing -- every month, we’re losing and I don’t think it’s fair that all of our cuts have to be off the backs of the employees,” Outen said. “So, what else are we doing to cut some expenses? The grounds look great and, Lord knows they needed it. They were a mess. You felt like you were coming up to a trailer park. But, it’s like, at home, you want to do things, but if you can’t afford them, you can’t afford them.”

Outen called employees those who “make us or break us.”

Bunch pointed out that most of KershawHealth’s expenses, as a ratio, are tied up in labor costs.

“Sometimes, it can look and feel that way,” Bunch said of Outen’s comments about hitting employees with cuts, “but, really, we’re not even cutting (FTEs) proportionate. It’s not quite as fast as the decline in admissions.”

He said how many hours employees work can change even from pay period to pay period as volumes fluctuate in each department.

That brought Boland to asking Outen to clarify what kind of cuts she meant.

“If volumes are down, they send people home,” Outen said. “They can still use PTO (paid time off), if they’ve got it. That helps to get the PTO dollars down. But, after so many times, the employees get frustrated and then they’re seeing all the grounds being done, the nice new trashcans outside. Staff doesn’t always understand; you’re sending them home and their hours are getting cut yet they see these other things being spent.”

Holmstrom pointed out that flex staff is almost always clinical nursing staff.

“I never see us flex down physicians. I never see flex down accountants. I never see us flex down anything else. So, often times it feels disproportionate that the clinical nursing staff is the one that’s being flexed down,” she said. “I understand the reasons behind it -- if there’s nobody to care for -- the challenge I think we may be getting to face, are we able to retain the best and the brightest of the nurses if, somehow, they lose their confidence that they’re going to have the hours and PTO when they need it. I think that speaks to that we need to grow the volume.”

Outen said that she has never heard of a physician being told to take a day off because there weren’t enough patients.

“If the hospital (employed) physicians are not producing, do they get sent home?” Outen asked. “If we’re not getting inpatients, we don’t use as many billers, we don’t use as many (health information management) people.”

Gunn said that in some departments, KershawHealth can respond quickly to volume changes; in others, it can’t.

“We’ve got a wonderful staff. They’re very flexible, they’re willing to step in and work with us, whether it’s going up or it’s going down. We do try to be very judicious with that, but, certainly, responsible with our resources,” Gunn said.

That led Boland to bring it up during the salary increase discussion.

“If you make a little more an hour, but you’re working 10 (fewer) hours a week, because of flex down -- you have to be mindful of how much you’re going to spend on the raise versus what you may have to do for performance-wise, dollar-wise. I think we’ve got to look at all that, too. If I make more money now, but I’m working (fewer) hours, I’m really bringing home less money -- the raise doesn’t mean much. You have to look at the total impact of that 2 percent,” Boland said, noting that the total impact to the budget is about $800,000.

Gunn said the administration will know if they can offer the budget based on whether or not certain financial performance goals are met by the end of December.

“Every expenditure that we make,” Boland said in response, “is, hopefully, to improve the quality of care (at) the hospital … which will, hopefully, impact the quantity that we do. Then, when the quantity picks up, then everything else picks up.”

In other business reported at the Sept. 8 meeting:

• KershawHealth began working with Orthopedic Advantage on creating the Total Joint Center of Excellence program on Sept. 3. He said it would encompass the “entire encounter” of joint care from a doctor’s office to an inpatient stay to rehabilitation. Gunn said the administration hopes to launch the program on March 5, 2015.

• The Express Care system in the main medical center’s emergency department has started, although Gunn said there are some “kinks” to work out. He said there have even been interventions in the department’s lobby for non-emergent patients. Express Care is not available on weekends at this point.

• A new marketing campaign will be unveiled to trustees at the Sept. 22 meeting. It will then be shown to both city and county councils on Sept. 23, followed by a “red carpet roll out” at Camden’s Little Theater on Sept. 30.

• Vice President of Marketing and Community Development Joseph Bruce provided an update on the LiveWell Kershaw program.


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