Update on Sequestration

To JHM faculty, staff and students

Dear Colleagues,

Yesterday's decision on sequestration and its impact on academic medicine have reverberated throughout our halls. Despite our disappointment, it has strengthened our resolve to forge our own path to a future in which we will remain as national and international leaders in the areas of education, research and patient care.

Because of sequestration, $1.2 trillion in funding cuts for government agencies will take place over a period of 10 years. For us, this means a loss of approximately $71 million annually in federal funding including a $27 million decrease in federal research grants, a $23 million reduction to Johns Hopkins-sponsored managed care products, as well as $21 million in Medicare payment cuts for our hospitals and doctors.

We additionally are facing the possibility of reduced payments from Maryland Medicaid, a shift in financial risk from payers to providers, and uncertainty related to rate setting by Maryland's Health Services Cost Review Commission.

And so, in preparation for the road ahead, we have continued to work on the JHM Strategic Plan, and included in it is a $150 million performance-improvement plan. The aim of this effort is to evaluate our current operations and procedures with the goal of improving efficiencies and spurring our continuous growth. At the heart of this plan is each one of you, as we will seek your valuable input on how we can become more proficient in all three areas of our mission of education, research and patient care.

We look forward to partnering with you as we begin this important period of performance-improvement and to strengthening our institution for years to come.

Sincerely,

Paul B. Rothman, M.D.
Dean of the Medical Faculty
CEO, Johns Hopkins Medicine

Ronald R. Peterson
President
The Johns Hopkins Hospital and Health System
EVP, Johns Hopkins Medicine