Firm hired to study Health sys. finances

A consulting firm, the Hunter Group is known for its work in helping fiscally challenged hospitals cut their deficits. The University of Pennsylvania Health System has hired the Hunter Group, a St. Petersburg, Fla.-based consulting firm, to assess the financially troubled system's overall operations and recommend ways in which it can better utilize its resources. The firm, which deals primarily with health-care systems that are incurring deficits, works to help hospitals reduce their deficits by trimming their expenditures and increasing their revenues. The Hunter Group has previously helped, among others, the George Washington University Hospital in Washington, D.C., the Detroit Medical Center and the University of Illinois Medical Center in Chicago. "We have people who are in very good shape, and we have some who are in terrible shape," said Jim Houy, a senior vice president for the Hunter Group. According to Houy, the firm has been called in to conduct "performance improvement-based work" with Health System administrators and will help oversee management. In seeking outside consultation, the Health System is actively hoping to regain some form of economic stability. The Health System's financial woes culminated in late May when it eliminated 1,100 positions and laid off 450 employees in an attempt to achieve a balanced budget. Houy said about eight to 10 Hunter executives will begin an approximately 10-week period on-site in early August, during which time they will review "all kinds of operating data." They will observe the hospital's day-to-day operations and will make numerous specific recommendations. Houy said the problems facing UPHS, which include payments below the actual cost of treatment and delays in reimbursements from the federal government and from private insurers, are "significant" but not "impossible" to alleviate. "From what we can tell, they don't seem to have any highly unusual problems," Houy said. Still, UPHS' financial problems -- typical of those affecting many other academic medical centers -- peaked in Fiscal Year 1998 when it posted a $90 million deficit, its highest ever. Houy said he did not know exactly how Hunter executives would go about reshaping the system, but he did note that the firm would look specifically at the number of employees and the amount of supplies. Houy said that, in most jobs, employees account for approximately 60 percent of total operating costs. The Hunter Group has encouraged drastic layoffs in previous visits to other hospitals, including the elimination of 2,000 positions at the Detroit Medical Center, according to The Philadelphia Inquirer. The forthcoming visit to Penn's Health System might be no exception, according to Houy, who said Hunter executives were prepared to be both "objective" and critical. "We're the outsiders and we can be the bad guys," Houy said. Stephen Wasserman, chairman of medicine at University of California San Diego Healthcare, where Hunter group executives served as "interim managers" in the mid 1990s, said the firm is generally "dispassionate" and occasionally "threatening" but was nonetheless helpful. "Every expenditure is going to get looked at. They just go down the list," Wasserman said. "These guys are going to say, 'Why should we be paying for [this or] that?'" he added. Kelley is currently out of the country and was unavailable for comment this week.