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County health CEO: $80 mil now could bring back $50 mil later

Saturday, September 27, 2008
Daily Herald
by Rob Olmstead

Give us $80 million more now, and we'll give you back $50 million in a year, the interim CEO of the new Cook County Health and Hospitals system told board members Friday.

Pitt Calkin outlined his budget Friday at a finance committee meeting of the new system. He is requesting an additional $80 million and 415 new employees for the 2009 budget. Those numbers are down from a previous presentation on Sept. 13 to the committee. There, he had requested more than $90 million and 460 positions.

Calkin called the 2009 request a "transitional" budget year for the system, because he wants to restore several of the programs lost at the system in 2007, but has not yet had time to implement cost-savings reforms that are long-term in nature, he said.

The $80 million does not include the benefits portion of new salaries, which are currently still being paid out of Cook County government coffers after the health system split from the county this summer.

If given the chance and the tools to do the job, Calkin said, he predicts being $50 million better off by the time the 2010 budget rolls around, he said.

While the budget hasn't been formally approved by the hospital board, the finance committee agreed informally to submit it to the county so it can plug in the numbers to move the budget process along.

David Carvalho, chairman of the hospitals finance committee, tried to address the pink elephant in the room by pointing out the request to the county board - which must approve the hospital board's budget - might be a tough sell, given that the new board was appointed to rein in out-of-control costs and to improve lackadaisical patient fee, insurance and Medicaid collections.

"There's a comfort level we need to get people over," Carvalho reminded Calkin. "I think that this budget is going to get a more difficult - scrutiny at every step of the process - and so we aren't doing you any sort of favors by asking you softball questions."

"We're going to need a fairly strong explanation of the efficiencies that you think will occur in 2009 and beyond," agreed board member Heather O'Donnell.

Calkin said the $50 million in savings would come, in part, from increased Medicaid collections. Already, he said, the hospital system has reduced a $41 million patient fees deficit they were handed in June to $36 million. In 2009, he anticipates collecting $20 million more in patient fees and Medicaid than this year. Consolidated purchasing should provide even more savings, he said. Additionally, he can begin trimming wasteful positions over the course of that year, but doing so requires a systematic examination of positions, needs and qualifications of people currently on staff.

"Managing existing people better isn't something that you do in three weeks," agreed Carvalho.

Calkin, who just joined the system two months ago, is getting the rude awakening that board members got a few months before him when they were handed the dysfunctional system. Several months into the process and board members and administrators still don't have a solid grasp on what this year's expenses are. Calkin said he has personally begun going through invoices in order to get a handle on what money is going out.

"I'm seeing [bills] that go back to 2007," Calkin told the board.

The phenomenon is not new. Former Cook County Board President Bobbie Steele told newspapers in 2006 shortly after she took over that she was discovering years-old bills at the hospital.

While Calkin is paid, board members are unpaid and have their own boards and companies to run. Nonetheless, they have been meeting weekly to try to right the floundering hospitals system.

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