Update on the Performance Strategic Priority: Financial and Performance Improvement

To the Johns Hopkins Medicine community

Dear Colleagues,

Managing a large, complex organization like Johns Hopkins Medicine and the $7.6 billion in revenue it produces is a challenge. But with our Strategic Plan as our guide, we are taking steps to create sustainable financial success and implement continuous performance improvement. Thanks to hard work and insight from so many of you, we continue to identify new sources of revenue, expand existing ones, and create better operating efficiencies so we can invest more in patient care, education and biomedical research.
  
The good news is that we have consistently exceeded our performance targets. Since we launched the Strategic Plan in 2013, our efforts have resulted in $33 million in savings and improvements. In addition, we are on track to reach our goal of capturing $244 million in net operating income by June 2019.

Our savings are coming from a number of different tactics: standardizing the selection and purchase of certain products, renegotiating contracts for more favorable rates, applying best practices for more efficient operations across the enterprise, and reducing waste and redundancies.

Most importantly, we are ensuring that our people remain our most important priority in our decision-making. As with most organizations, labor and benefits represent the largest piece of the budget pie. Rest assured: You are our most important resource, and we have focused our efforts to realize savings by reducing our spending on non-labor products and services—not on staff reductions. To support those efforts, however, we continue to analyze the need to fill vacant positions before rehiring.

Our supply chain initiative is a key focus of our performance strategy. We have achieved savings on hundreds of products—from joint and spine implants to phone services, computer parts and office supplies. This resulted in more than $20 million in savings in fiscal year 2015.

Better processes, such as one we recently developed to solicit requests for proposals (RFPs), are also showing promise. The new RFP process has allowed us to procure new beds and operating room lights for some of our hospitals at a significant price reduction, while retaining quality. We are adopting a more collaborative approach with our clinicians in the process. They are providing guidance on the specifications we should be requesting for supplies and equipment to ensure that we receive the right high-value products, as well as helping to evaluate the bids. Our Armstrong Institute for Patient Safety and Quality and the roughly 20 active "clinical communities" it has convened are also critical to our success. These groups are focusing on everything from blood management to medication safety and palliative care to identify more effective, innovative solutions. All are achieving higher value through better quality and more competitive pricing.  

What we have shared represents just a portion of the projects we are undertaking as part of our performance initiative. The health care industry continues to evolve and become more complex. Everyone has a role and must take ownership in the institution's financial success to ensure that we deliver exceptional patient care, quality education and breakthrough research. If you have suggestions or ideas, please share them with your manager or email strategicplan@jhmi.edu.

We appreciate our people and thank you for rallying behind our causes.

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