Hospitals and governments have a lot in common. They are big organizations; they provide a large number of different services; they employ lots of people; the public depends on them; and Americans love to complain about them. After 40 years of working in hospitals, I’ve seen a lot of management mistakes and learned how to avoid those mistakes. Our political leaders can learn a lot from them as well. Here are some of my thoughts.
Don’t indiscriminately fire all of the junior employees
When there are budget cuts and you need to reduce staff, the path of least resistance is often to fire all of the newest employees. Physicians and most other hospital professional staff have a 6 or 12-month probationary period before they become full members of the medical or nursing staff. During the probationary period, it is pretty easy to fire them with minimal justification but once they become full members of the medical or nursing staff, it is much more difficult to let them go.
There are several problems with this approach to staffing reductions. First, the newest employees are generally the lowest paid employees and getting rid of them does not save you nearly as much money as getting rid of senior employees.
Second, you end up firing some of your best employees, leaving you with an overall lower caliber workforce. At the Ohio State University, everything is phrased as an analogy to football. Let’s say that the president of the university decided that the football program was too expensive so he directed the coach to cut all of the freshman players. The first year, this will have relatively little impact because most of those freshman would not have been put into games anyway. But the second year, the previous seniors would have graduated so you are dependent on a roster that includes players who would otherwise have just been back-up players and now have to become starters. The team that you put on the field is nowhere near as good. The net result is that the Buckeye football team loses games to all of the other Big 10 teams that did not cut their freshman players the previous years. The same thing happens when governments fire all of their probationary government workers – within a few years, incompetent senior workers get promoted to managerial positions because some of the junior workers who would have made great managers were all fired. In other words, firing all of your probationary workers is a sure way to mediocracy.
Third, it makes it hard to recruit to quality workers in the future. If the best candidates for jobs perceive that there is a strong possibility that there could be future indiscriminate culling of all of the probationary workers, those most qualified candidates will seek jobs elsewhere for better job security purposes. What you are left with is lower quality job candidates who can’t find jobs elsewhere and are willing to risk mass firings during their probationary period because they don’t have other options.
You need migrants
At our hospital, most of the housekeeping staff are immigrants to the United States – especially Somali immigrants. This is because U.S. born citizens don’t want to work in housekeeping and given the current historically low unemployment rate, you can’t keep U.S. born staff in housekeeping because they can get jobs elsewhere that they don’t have to clean toilets and change soiled bed linen. Immigrants do the hospital work that you can’t get anyone else to do. And for the most part, they show up to work every day and are hard workers because they don’t have other work options.
In the larger U.S. economy, immigrants also do the jobs that U.S. born citizens won’t do. They are roofers, painters, cleaning service workers, nannies, and farm workers. I challenge anyone to find 20 U.S. born citizens who will pick tomatoes in your 100 acre tomato farm and show up for 8 hours in the field every day for 3 months out of the year, rain or shine.
Downsizing the accounts recievable department is just plain dumb
When hospitals need to downsize staff, the last people you want to fire are all of those in your accounts receivable department. They are the ones that ensure that the patients and insurance companies that owe you money actually pay. When you let go of too many of your revenue cycle department staff, there is not enough staff left to work denials, collect co-pays, or even know who has and has not paid for their hip replacement surgery.
The IRS is the accounts receivable department for the U.S. government. Yes, it is true that no American likes paying income taxes; but it is also true that Americans do not like paying expensive healthcare bills. If you don’t like high healthcare prices, you don’t blame it on the hospital accounts receivable workers – they are only trying to collect what you knew upfront that you would owe for a healthcare service. Same with the IRS staff – they are just enforcing the tax laws passed by congress.
Wealthy people like to complain that they are disproportionately targeted by IRS audits. Well… duh, of course they are! In our hospital, the accounts receivable employee is going spend an hour to go after the patient who didn’t pay for a $30,000 heart bypass surgery before they will spend an hour to go after the patient who didn’t pay for a $20 flu shot. To extend the analogy, would your local police department put as many detectives to find the person who shoplifted a candy bar as they would to find the person who robbed two million dollars from a bank?
Asking employees to justify their jobs doesn’t work
At our hospital, the doctors had to fill out a document every year detailing all of their accomplishments during the past year. We call it the annual “Justify your existence form” and was used to determine promotions, determine salary raises, and justify firings. It took hours to complete and I absolutely hated doing it. For me personally, I had to fill it out in the evenings and weekends because I was too busy doing actual doctoring during the day. The doctors who put the most time into completing the form were those who didn’t have enough work to keep them busy during the day so they had plenty of free time during the workday to embellish their forms. The medical directors and department chairmen who reviewed those forms had dozens and sometimes hundreds of forms to review and so they often just judged them on how many pages of accomplishments a doctor would list rather than the actual content of the document. Consequently, some of the more unproductive doctors would basically list every little thing they did, from individual grand rounds they attended, to the titles of journal articles that they read, to the number of tweets about medicine that they tweeted, and to the number of hours that they volunteered as their kid’s little league baseball coach. Furthermore, people would lie. I had medical directors under my supervision who would list their involvement in hospital committees that I chaired and knew full well that they never showed up for a single meeting all year.
Deciding which federal government workers to fire based on their responses to weekly emails to list all of their accomplishments in the past week makes absolutely zero sense to me. To extend the football analogy, it is like deciding which of your five quarterbacks to start in the big game based on an email asking each one of them to list what they accomplished in practice last week. The person in the best position to judge an employee’s performance is the employee’s supervisor. Coaches are the best judges of football players and officers are the best judges of soldiers.
Sometimes, a cheap tool is an expensive tool
“A cheap tool is an expensive tool” is one of those things that just about every father tells his kids. The meaning is that if you buy the cheapest hammer at the hardware store, it won’t work as well as the more expensive hammer and it will only last half as long as the more expensive hammer. In other words, in the long run, you’ll end up spending more money if you buy inexpensive, poorly made tools than if you buy expensive but well made tools.
At the hospital, we were required to base equipment purchases on competitive bids. Once, a suture company came in with a very low cost suture and the hospital leadership saw that the hospital could save thousands of dollars a year by switching to this inexpensive suture. The problem was that the suture was difficult to tie, broke easily, and often caused tissues to tear. The result was that the operative times increased, the surgeons had to use twice as many packets of suture than in the past because they had to throw so much of it out, and patients complained about ugly surgical scars. A cheap suture is an expensive suture.
Government efficiency watchdogs love to shout out about the Pentagon buying $20,000 toilets. But those watchdogs better make sure that the $50 toilet that they want to buy from Home Depot instead actually flushes when it is installed in a $10 billion nuclear submarine. The bottom line is that governments, like hospitals, should not make purchase decisions on price alone.
When it comes to saving the hospital money, people lie
People twist financial reporting and statistics to mean whatever they want them to mean. For example, I had a manager claim that his department was able to reduce expenses by 75% while increasing revenue by 60% over the previous year. Well… that was because that department bought an expensive new MRI machine last year so that they were able to do lots of lucrative MRI procedures this year. He had attributed the entire cost of the MRI machine to that previous year whereas he should have depreciated the cost over the next 10 years. When analyzing cost savings, be sure that there was careful attention to depreciation.
Same goes for revenue. If there were 5 faculty members listed on a $1 million NIH grant, each of the five of them would claim that they were responsible for a million dollars worth of grants. So that’s $5 million, right? …wrong! Similarly, everyone claimed “downstream revenue”. If the transplant surgery department claimed $10 million in clinical revenue for heart transplants the previous year, the cardiology division would also claim that they were responsible for the $10 million in revenue because they referred the patients with heart failure to the surgeons. And the family practice department would claim the $10 million in revenue because they referred those patients to the cardiologists in the first place. Suddenly, that $10 million in revenue looks like $30 million when every department’s spreadsheets are added up.
A number of years ago, our hospital hired a consulting company to identify cost savings measures that we could implement to reduce expenses. The total amount of money that they identified that we could save was breathtaking and the hospital administration pounced on it and hired the consultants for a year to implement all of the cost savings measures. The consulting company promptly advertised to other potential future clients that they were able to save our hospital millions of dollars. But we found out that the cost savings were way, way overinflated. They claimed savings by closing nursing units that were already planned to close, by reducing staff expenses for staff that were planning on retiring anyway (and not including the cost to replace them), by having physicians double up to share offices (that usually only had room for 1 desk), and by eliminating secretary transcriptionists causing the doctors to spend valuable time typing up all of their referral letters. Ultimately, the actual savings at the end of the day were less than the cost of the consultants. Consultants are the worst offenders when it comes to exaggerating the cost savings that they claim they alone can recover.
Vindictive managers are a curse on the organization
Once, we had a physician who was in a leadership position in the hospital and had a rival in a different department who he blamed for impeding his academic success. So, that physician went to a local malpractice attorney and told the attorney about some surgeries that the other physician had performed that had complications… and then told that attorney that he would be willing to be a paid expert witness in any malpractice suits agains the surgeon. It was the physician’s way of getting retribution for unrelated grievances. The battle between the two physicians was ugly and costly to the hospital.
I’ve seen division directors take away research lab space from researchers who criticized them. I’ve seen department chairs reassign physicians to dingy offices in the hospital basement because they just didn’t like those physicians. I’ve seen OR directors reassign surgeons to the unpopular Friday afternoon operating room block schedule so that the OR director could himself take the more desirable Tuesday morning OR block. Several years ago, a newly hired division director used her first division faculty meeting to tell the physicians that none of them would we working here one year from now. A medical school dean I knew once told me proudly that he had fired 13 department chairmen in his first year as a dean (he himself was then fired by the university board of trustees and it took the medical school years to recover its academic stature).
When hospital leaders use their position of authority to get revenge on physicians that they perceive have harmed the leaders’ reputations, there is inevitably collateral damage to the hospital. It results in lawsuits that cost the hospital money and time. It creates a hostile workplace environment that is an impediment to physician recruitment and retention. And it damages the hospital’s reputation when word of vindictive acts gets to the local newspaper reporters (as it inevitably does). Vindictive government leaders are no different.
So, what should governments do instead?
- If you need to downsize the organization, eliminate staff based on competency and productivity, not on how recently they were hired.
- Our immigration problem is not that we have too many immigrants, it is that too many of our immigrants are not here legally and thus not paying income taxes and payroll taxes. We need more legal immigrants.
- Don’t excessively cut the IRS budget unless you are a proponent of a larger federal deficit.
- Emails demanding federal workers justify their jobs is unproductive and will not identify incompetent or unproductive workers.
- Sometimes using cost as the primary decision making determinant in federal expenditures in the name of improving efficiency actually creates greater inefficiency.
- All federal government statements claiming cost savings must be independently fact-checked and audited. It is human nature to exaggerate and lie in order to justify whatever it is that they are doing.
- When an organization’s leaders use their position of authority to get revenge on others, the entire organization suffers.
March 6, 2025
