Enloe cuts costs by contracting services

Pointing to a projected budget shortfall of $5 million in 2004, administrators at Enloe Medical Center announced they will soon begin contracting out a variety of services to private, outside companies. The move is one that hospitals across the country, even nonprofits like Enloe, have resorted to in the face of rising operational costs and declining revenues.

“We have been slower to move toward this than other organizations,” Enloe spokeswoman Anne Prater said. “We understand change is difficult, and we try to avoid it at all costs, but the reality in health care right now is that we need to improve quality and maintain efficiency.”

About 136 non-union employees in five departments will be affected by the change. Employees in Enloe’s Behavioral Health Center, which provides mental-health services, will now work for Horizon Health Care, a multi-million-dollar company headquartered in Lewisville, Texas, that operates hundreds of outpatient facilities across the country. Food service workers will be shuffled to Compass/Morrison; housekeeping employees will work for Compass/Crothall; the folks who work in “Bio-Med” (servicing medical machines) will now be Aramark employees; and Quorum Technologies will take over the hospital’s data processing needs.

Prater said all the affected employees will be given the option to work for the new contractors at their present salaries and similar benefits plans or take severance pay if they don’t wish to switch employers. Attempts to contact employees were not successful, and Prater said she couldn’t speak on their behalf, but she maintained that every effort was made to ensure a good transition.

“We said ‘no’ to many different firms that couldn’t guarantee us 100 percent that they would allow employees to transfer over,” she said. “We really did walk away from some that might have been less expensive for us.”

While contracting out housekeeping, food services and data entry will likely save the hospital money, the Behavioral Health Center has the potential to actually provide revenue. Prater said there was a probability that services would be expanded under Horizon’s leadership to keep up with local demand. Behavioral Health employees had been worried for some time that the center would have to be shut down, Prater said.

“Behavioral health is an area of huge community need. We haven’t been able to focus on that,” Prater said. “When employees heard [Horizon was taking over], they were delighted. Given today’s health care environment, they were worried the center might close.”

One employee in data entry will be laid off.

The “health care environment” Prater spoke of is indeed bleak. Hospitals have struggled for the past decade or so with spiraling costs for pharmaceuticals, medical technology, labor, workers compensation and indigent care. State and federal reimbursements have sagged and are expected to plummet within the next fiscal year, a key component of Enloe’s figures suggesting a shortfall. Labor costs have risen in response to a nationwide shortage of qualified health care workers, and America’s population is aging and increasingly uninsured. Meanwhile, hospitals are required by law to take all patients, regardless of ability to pay.

Even so, labor advocates have traditionally resisted the trend toward outside contractors in hospitals, charging that service quality and workers’ rights suffer when for-profit companies take over hospital departments. About half the country’s hospitals contract out some services.

Instead of a $5 million shortfall in 2004, Enloe expects with these changes to finish the year $3.5 million in the black.