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Monday, December 1, 2008

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.


Comments (23)

Maybe Vestas can hire all of OHSU's castoffs.

Its seems that wind power and biotech are interchangeable in SoWa.

I can see the the headline in the Oregonian's "How We Live Sustainably" section:

From lab coats to green collar: SoWa adds by subtracting

I, for one, was cheered to read that OHSU's values haven't changed.

But what becomes of the SoWhat Health Club?

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.

Yeah....riiiiiight, Joe.

That $57 million tram was outside of your control, even though It was OHSU's dumb idea, and OHSU pushed CoP into proceeding when they wanted to pull out.

Give us a call when you come down from whatever pharmaceutical you're on.

Um, Jack, I think your title is precisely backwards.

--> 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.

Unless I have my academic categories wrong they are freezing the higher end folks--the "unclassifed" employees such as tenured faculty and upper level administrators.

Happy to be corrected if I am wrong on this one, but the unionized nurses, clerks, etc. are all protected.

"it’s important to remember that this is not a self-inflicted wound,,
,,external factors outside of our control,, not cost or performance issues"

Dear Joe,
You left off the parts where Kohler recklessly endangered OHSU's core missions with wild ventures, mismanagement and comittments without the means to sustain.

OHSU is on the hook for $200 million in Oregon Opportunity bonds. Most of which was squandered on a new building on pill hill which is 10s of milions short of being fully equiped and staffed.
OHSU is on the hook for a $37 million Tram share.
OHSU is on the hook for building a new SoWa building and delivering 100 parking spaces they've already been paid for.
The $3.5 million they were paid is gone and they have no funding for the new building.
OHSU has assumed the responsibility for the current $115 million mortgage for the first SoWa building their Doctors Group can no longer afford.
And theres' more Joe.
You could come clean with a full accounting summary of the OHSU fiscal mess.

And while OHSU was playing fast and loose with a crap shoot in SoWa their Vaccine and Gene Therapy Institute (VGTI) ran out fo space on OHSU's west campus in Beaverton.

VGTI then announced that it was moving to Florida.

Where a real biotech cluster is growing.

How many different ways can OHSU leadership fail and no one is held accountable.


The tram was $57 million, for which OHSU is on the hook for all but 15%. That leaves $48.5 million for OHSU to fork out.

Of course, the 15% is covered by the city taxpayers, who, by and large, will be required to pay $4 a ride on the thing.

All that money going to purposes other than providing quality health care (primarily the institution's 'Edifice Complex' driven by craven desires to be immortalized in concrete, steel and glass).

Don't hold your breath on financial transparency from OHSU. That's one of the reasons why they left the Oregon State System of Higher Education, so they could ply the market with their ambiguous status as a 'public corporation'.

Yes...Despite Joe's claims to the contrary, OHSU did, and has repeatedly, inflicted itself with wounds.

Are they going to blame this one on the price of steel, the falling dollar, or the loss of the $200,000 malpractice cap?

Lets see, 1 part fiscal melt down plus 1 part traffic boondoggle = a toll booth on Macadam?

Um, Jack, I think your title is precisely backwards.

No it isn't. The doctors who practice medicine up there will continue to get raises, if not from their faculty position then from their lucrative practice income. "Unclassified administrative staff" (whatever that is) doesn't sound like the bigwigs to me.

You're right that union folks will be protected -- that's what they pay union dues for.

You're right about the $48.5 million godfry, but I was deducting the many millions OHSU has been paid under contrived pretenses to get the $37 million. Millions more are scheduled to be paid to them.
Just as many millions were paid to the developers.
All to get the excalating Tram costs covered while putting on the charade that the city/taxpayers were still funding a small portion.

a toll booth on Macadam?

Nah. Sam the Tram wants to install a turnstile at the front door of your home so that you pay whenever you go out.

In the Oregon University System unclassified positions include instructional, research and administrative appointments.

Unclassified Administrative employees are non union administrators, managers and mid level worker bees. Some high level, some not so high level.

My company froze salaries last year - for corporate officers and top-level executives. They are continuing that freeze this year, and while we peons are getting far smaller raises this year, we are still getting them.


I am thinking of the Federal government, where "unclassified" means the senior executive service, which is top level and whose salaries are not controlled by the civil service system.

It would be good to know who OHSU is talking about here. It still doesn't look to me like it's the "little people" on your title, implying the folks who sweep the floors, clean up the operating rooms, type up the reports, etc.

Here at OHSU, "unclassified" means non-union. This includes executives, administrators, managers and providers.

All nurses (ONA) and most low-and-mid level employees are union (AFSCME).

Tram cost breakdowns are posted here:

The wages may be frozen for unclassified employees but that will not protect the union employees from lay offs. Or are they planning to get rid of some of the 20 or more vice-presidents on the OHSU payroll.

union worker: The four line items on the "cost breakdowns" is mighty slim to actually figure the real cost of a project. Some items not included:

Land cost (two city blocks of street ROW given to tram just in the east terminus-value $8M).

Design competition costs.

Administrative/Planning costs of all city bureaus to implement the project.

The financing/debt costs.

PDC administrative costs.

The building, SDC, and other fees forgiven by CoP.

A professional, outside audit would have much higher numbers than CoP, OHSU and PDC sells.

What do you expect, Lee?

All I had to see was that it was OHSU propaganda to discount its veracity.

So, thanks, union worker, but given the history of dealings between OHSU and the CoP on this, I don't trust those figures.

What have U.O. and O.H.S.U. got in common? Both have recent 100 million dollar NIKE "gifts". Both hand huge no-bid contracts to TVA architects and Hoffman. And both are in real financial trouble.

As for your "OHSU FREEZES SALARIES OF LITTLE PEOPLE" twist you put on this story, this is exactly what I'm talking about in how the media has to put the worst possible spin on the current economic situation.

As I posited in my comments on the Palin backlash story, I'm not buying into their "the end times are near" hyperbole and rather look it as how fortunate these so called "little people" (I for one would be a bit peeved at being catagorized as such, but hey, to each his own) are to still have jobs when others are losing theirs.

And on that subject, I live in a town that at one time had at least six mills all running at full strength and is beholden to the logging industry in general. As bad as that's been over the past twenty years or so, I don't see rampant homelessness, massive foreclosure problems and high unemployment as is being shoved down my throat by the likes of Brian Williams, Bob Schieffer, Charlie Gibson, et. al., and if anyplace should be under a mountain of economic hardship, it's this place.

Funny thing is, I'm seeing quite a few 'Help Wanted' signs posted around town and overall, everything is bustling and buzzing right along as it was two years ago.

Just a suggestion that is being put forth in a humble manner, but how about putting a 'glass half-full' twist on these types of stories instead of towing the standard 'everybody is feeling the economic hardship' because that's just not true and is proven as such in myriad ways on a daily basis.

I suggest that people need to rely less on what the talking heads are saying - and who are most definitely nowhere close to the common man on the street in any way, shape or form - and rather do their due dilligence and homework and they too, will see that for all intents and purposes, it's not that bad out there.

"The man who reads nothing at all is better educated than the man who reads nothing but newspapers." -- T. Jefferson (1789)

As an unclassified employee at OHSU, let me first set some facts straight.

Ben: "And while OHSU was playing fast and loose with a crap shoot in SoWa their Vaccine and Gene Therapy Institute (VGTI) ran out fo space on OHSU's west campus in Beaverton.

VGTI then announced that it was moving to Florida."

"Moving" to Florida? You mean expanding. Your statement insinuates that OHSU "lost" the VGTI, which we did not. The Florida facility is still very much part of OHSU - in fact, my department supports them.

Union Worker: "Here at OHSU, "unclassified" means non-union. This includes executives, administrators, managers and providers.

All nurses (ONA) and most low-and-mid level employees are union (AFSCME)."

Thank you - finally someone who knows the correct answer.

Irene: "The wages may be frozen for unclassified employees but that will not protect the union employees from lay offs. Or are they planning to get rid of some of the 20 or more vice-presidents on the OHSU payroll."

There are not 20 or more vice-presidents on the payroll - there are actually about a half a dozen, which is typical for an organization with 13,000+ employees.

Conspiracyzach: "What have U.O. and O.H.S.U. got in common? Both have recent 100 million dollar NIKE "gifts". Both hand huge no-bid contracts to TVA architects and Hoffman. And both are in real financial trouble."

Let's be clear here - the gift to OHSU from Phil Knight was not to the entire university - it was to a specific cancer research and treatment center. The rules governing donations are pretty stringent. The money will also be paid over the long-term. There isn't much that money can do to help the entire university's financial struggles in the short-term.

Let me just say that I have worked at OHSU for several years as a union employee and have recently been promoted to an unclassified one. To be blunt, I am a low-level manager. I have no personal agenda in defending OHSU's decisions, because I wasn't in a position to make any of them.

Am I disappointed that shortly after being promoted I am finding out I'll get no raise for at least a year or two? Of course. But I'm willing to help out and do my part. I have a roof over my family's head and we have food to eat, so I'm not complaining. But I can tell you all that the people who work here have families just like everyone else and are mostly just working hard and hoping they still have a job next month. Let's not forget that out of 13K employees OHSU is made up mostly of 12,980 "little people" who all work hard and do their best to provide healthcare, research, and education for Oregonians. When you bash the institution it feels a lot like you're bashing us too.


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