Big Virginia Hospital System Cuts Management Jobs

With its well-regarded hospitals dominating Northern Virginia and $2.3 billion in net operating revenue last year, Inova Health System must be the envy of many hospital groups. But in a sign that even the strongest players feel pressure to save money and operate more efficiently, Inova this week trimmed many of its mid-level management positions.

Inova cut 117 management jobs, 84 through attrition, spokesman Tony Raker said in an email. “Inova is responding not only to economic challenges but to anticipated changes (as well as unknowns) within the health care reform environment,” he wrote. “While the economy is a universal challenge, hospitals and health care systems face specific hurdles as the nation struggles with escalating health care costs and, in turn, providers struggle with continuing reductions in Medicare compensation, infrastructure maintenance, higher material costs not to mention technological investments necessary to maintain service excellence.”

Raker wrote that the change was designed to reduce the levels of bureaucracy between senior managers and patients and improve patient care. After the cuts, Inova will have 889 management positions. “It should be stressed that while reducing expenses is a component of our strategy, cost reductions were not the primary driver of the management restructuring,” Raker added.

“Many hospitals are clearly feeling cost pressures,” says Alwyn Cassil, director of public information at the Center for Studying Health System Change, a Washington research group. “States are already cutting Medicaid rates and reductions in the growth of Medicare payment rates are coming, so it’s not surprising that hospitals are squirreling away nuts for the winter.”

With 1,750 licensed beds, Inova, which is non-profit and based in Falls Church, Va., last year reported more than 95,000 admissions, 786,000 outpatient visits and a third of a million emergency room visits. Inova is such a presence in the Virginia suburbs of Washington that federal anti-trust regulators successfully blocked its attempted aquisition of another hospital group back in 2008 because it would have given Inova control of nearly three-quarters of the market.

jrau@kff.org