OHSU freezes salaries of the little people
This just in from Pill Hill:
From: Joe Robertson
Subject: SHARE WITH STAFF: OHSU Cost-Cutting Measures
***You are receiving this message because you are a member of the OHSU Leadership Team. Please share this information with your staff.***
Members of the OHSU Leadership Team:
I’m writing to update you on OHSU’s financial position. While there is still a good deal of uncertainty over the ultimate length and depth of the ongoing global downturn, it has now lasted long enough that OHSU will have to treat this as our new economic reality for at least the next 2-3 years.
As we move to address the challenges this presents, it’s important to remember that this is not a self-inflicted wound. The impacts on OHSU are based largely on external factors outside of our control. These are environmental issues, not cost or performance issues. This is a storm that we can and will weather.
Unfortunately, the impact is significant enough that it will be necessary to reduce the number of OHSU employees. It simply is not possible to make up the gap without doing so. Personnel reductions will be made by ELT members and their direct reports in ways that preserve as much of our current workforce and mission as possible. We do not yet have the specifics on personnel reductions, but the sooner we act the more people and programs we will be able to preserve. The process for taking additional steps, including personnel reductions, will be shared by ELT members with their units within the next two weeks.
Several steps will be taken immediately, including aggressive hiring restrictions; these will join other actions that have been implemented since October. Labor costs account for approximately 65% of the university’s variable expenses, so most of our financial responses must focus on that area.
Immediate measures include:
--> Hiring freeze. Effective immediately, no hires will be made without authorization from an Executive Leadership Team member. These restrictions--in place through FY10--do not apply to positions fully paid for by outside funds. ELT members will review and discuss all exemptions, which will be rare.. An important reason to pursue a hiring freeze is to protect our existing workforce the best we can.
--> Salaries. Effective immediately, salaries of unclassified administrative staff and faculty will be kept at current rates until further notice. This does not include employees covered by collective bargaining agreements currently in effect or those with longer-term employment agreements.
--> Incentives/one-time payments. Effective immediately, incentive plans and one-time payments will be subject to tight executive review and approval. This does not affect clinical staff with productivity-driven compensation. In addition, ELT members will forgo incentive-based compensation for 2009.
--> Changes to benefits. OHSU is reviewing all opportunities to reduce expense and preserve jobs, including benefit changes such as changing retirement contributions, revising university incentive programs and eliminating the cash-back program.
--> Unit-led reductions. Effective immediately, ELT members are instructing their direct reports to seek substantial additional cost savings. Measures will include elimination of positions, major departmental reorganizations and/or consolidations, restrictions on overtime, restrictions on travel, hosting and consultants, and other approaches as appropriate.
--> Space management. Space is our biggest expense other than labor. OHSU will work to reduce its footprint on both owned and leased space with a focus on leased space in the short term. Effective immediately, no new leases or lease extensions will be approved without ELT approval. OHSU will also look for opportunities for early termination of existing leases.
--> Capital spending. Effective immediately, most non-emergency capital expenditures will be deferred. All capital expenditures, including approved FY 09 capital budget items, will require renewed Executive Leadership Team approval.
OHSU employees will be notified of these immediate changes, as well as the need for personnel reductions, through a Directline message later today. Please share the information in this email with your staff before then, if possible. If you have any questions, please contact your ELT member.
As we move forward, we need to remain aggressive in pursuit of strategic growth and revenue generation opportunities in all mission areas. The clinical enterprise will need to continue to grow. OHSU Healthcare has already begun working to maintain high levels of productivity in the face of changing volumes, placed a “pause” on hiring (prioritizing those positions that directly impact high-quality care), placed a hold on some capital expenses, modified timelines for unit expansion, and stopped funding for conferences, travel and minor equipment.
As part of the revenue strategy, we will continue to pursue grant funding while we work to raise our rate of indirect cost recovery to federal levels. We will also continue to look for alternative models of mission organization that reduce costs and improve services.
OHSU’s missions, values and long-term goals are unchanged. We will undoubtedly have to recalibrate our strategies and tactics in Vision 2020, however, to adjust to the new economic reality. We will continue to manage carefully to preserve as much program and as many people as we can through these challenging times. Academic health centers across the country are in similar straits.
As we work through the process of identifying necessary personnel reductions, as well as opportunities for new revenues and cost savings, I want to hear from you. The ELT cannot do this alone; we want your input. Unfortunately, every day we wait to make changes increases the challenge for the current fiscal year. We must act with deliberate haste.
Please contact your ELT member with ideas.