Friday, January 12, 2018
The big story on Tuesday's front page of Arkansas' Newspaper announced that the University of Arkansas for Medical Sciences was having to operate as a business like any other. And it was having to cut its budget like any other business when expenses outrun revenues.
Only the naive will be shocked to discover that physicians and even medical schools are subject to the same law of supply and demand that governs us ordinary mortals. And so UAMS, the state's largest public employer, is having to cut some 600 positions on its payroll to deal with a deficit of twice the amount it had originally calculated. No businessman would or should be surprised when optimistic forecasts prove less than realistic.
Here's an old riddle: What's the difference between a recession and a depression? A recession is when folks you know are laid off as the ever volatile economy takes a turn for the worse. But it's a depression when you lose your job. It's nothing personal. It's just that business is business.
Personnel, including salaries and benefits, make up more than 65 percent of UAMS' budget, which is no surprise. The brass expects to save between $26 million and $30 million before June 30.
"Our productivity, we don't believe, is our primary issue," said Stephanie Gardner, the interim chancellor. "Our hospital is full. But we need to change the expense curve, and, to some extent, we're going to have a lot more pressure on the other parts of our mission."
Honesty, it's refreshing. There's going to be a lot more pressure in some departments as the number of employees dwindles. It's always the case in the private sector, too. Why sugarcoat it by saying otherwise?
Michael Chernew, who is a professor at Harvard Medical School, says one problem is that a lot of those who provide medical services to the American public, including medical education, have been spoiled by all the years of plenty they enjoyed without taking into account that the inevitable day of reckoning would arrive, as it did for UAMS this week. "They got used to high prices," as Professor Chernew put it in plain English. "They built a lot of stuff." Thank you, Professor. It's a pleasure to hear someone in academia speak in plain English rather than the usual academese.
"I do not think that there's someone coming over the hill to send more money," the professor warned. So administrators of medical schools like UAMS have "got to adapt to new realities to survive. They're going to make sacrifices in mission, manage their costs aggressively and raise tuition. One way or another, they're going to have to make their business model work." Or adopt a new one, Professor Chernew might have added.
Now it's UAMS' turn to think like the business it is, and treat medical services, including education, like the commodities they are. Welcome to the vast club of those who've had to learn by experience. You'll find a lot of us are fellow members.
Editorial on 01/12/2018
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