JCAHO shake-up: Symptom of serious financial woes?
Despite losses, agency says it’s business as usual
Recent defections among long-time members of upper management and a sudden, unexpected bid to reorganize operations has some observers asking whether the Oakbrook Terrace, IL-based Joint Commission on Accreditation of Healthcare Organizations (JCAHO) is headed for a serious organizational crisis, or simply adjusting to changing realities in a turbulent health care environment.
While the Joint Commission denies that its reorganization is a response to financial shortfalls, it’s apparent JCAHO is going through some tough times. Officials refused to divulge specific financial information to Hospital Peer Review, saying they prefer to release that information at the end of the year, apparently in the hopes that an uptick in fourth quarter revenue will improve the organization’s financial picture for 1999. The Joint Commission’s revenues were $108 million in 1997, with 72% of that coming from survey fees. The financial data for 1998 aren’t yet available because the Joint Commis sion filed an extension and still hasn’t reported that information.
A Joint Commission spokesperson says the reorganization plan had been in the works for "a few months" before it was formally announced Sept. 30, but Ann Kobs, MS, RN, former sentinel event specialist and director of the department of standards at JCAHO, says she had "no notion that it was coming" when she left the organization July 2 for a job in the private sector. "This is relatively new. Friends I had there were as shocked as I am." Kobs left the Joint Commission to take a consulting position with Type One Solutions in Fort Myers, FL.
The Joint Commission’s official line is that the reorganization is an attempt to "focus [JCAHO’s] attention and resources on enhancing the quality, adaptability, and affordability of its accreditation services." Russell P. Massaro, MD, executive vice president for accreditation operations at JCAHO, says, "The decline in revenue related to changes in the health care environment and its impact in particular on home care and long-term care for 1999 was absolutely not the driver for the reorganization. It was simply an exclamation point on a sentence that we’ve been writing for a number of years. The Joint Commission, like any other business, reassesses where it needs to be and where it needs to go in relation to its functions, its mission, and its customers on a regular basis."
Nevertheless, Kobs maintains that money has been an issue for the organization for some time now. She claims that the education department, which generated about 7% of the organization’s revenue in 1998, has been particularly hard hit. "Seminars are being cancelled because organizations aren’t spending money to send people," she says.
Massaro acknowledges that education revenue has been in decline, but maintains that that’s true of other organizations as well, such as the state hospital associations. "Because of changes in the health care environment across the country, education programs have been put on a back burner or seen as discretionary," he says.
Tightening of fiscal resources’ affects us all
Don Nielsen, MD, senior vice president for quality leadership at the American Hospital Association in Chicago, says it should come as no surprise that the Joint Commission is in the same boat as many hospitals. "Today’s health care environment is one where there is tightening of fiscal resources," he says. "There is tightening in terms of human resources, and there needs to be overall improvement in terms of efficiency for the Joint Commission to be able to stretch their resources as far as possible."
Of potentially greater concern than the decline in education revenue is the precarious financial situation of the home care and long-term care industries. As a result of tough economic times brought on by the federal Balanced Budget Act, "a lot of home care agencies will be dropping their accreditation," Kobs says. That’s significant, because the Joint Commission derives the bulk of its revenue from accreditation operations, the area Massaro oversees.
Kobs notes that before she left, executives at the Joint Commission "had frozen surveyor positions and were attempting through attrition to downsize the number of surveyors." Massaro, however, maintains that the decision not to hire or train new surveyors for 2000 was merely the result of the Joint Commission’s annual surveyor manpower formula, which the organization calculates every summer to determine the total surveyor needs for the following year based on the volume of work expected. "If things change as we get into the new year, we will re-evaluate our position," he says.
Meanwhile, changes continue to occur among upper management. (See box, p. 180.) "There is the sense in-house that no one is safe at this time," Kobs says.
While five vice presidents and one chief of financial operations have departed or announced plans to depart from the Joint Commission in recent months, Massaro maintains that most of those departures were voluntary — either because of retirement, personal reasons, or to take positions elsewhere. The Joint Commission acknowledges, however, that two vice presidents were fired directly as a result of the reorganization.
To add to the joint commission’s problems, it was hit just two months ago with a scathing report admonishing it for failure to detect or prevent major quality problems in hospitals. As a result of the report, from the Department of Health and Human Services’ Office of Inspector General, the Joint Commission decided to make its unannounced survey visits truly unannounced.
It remains to be seen what impact, if any, all this will have on hospitals accredited by the Joint Commission. "It might be that, if there are financial problems, the cost of publications could go up or the cost of surveys could go up," says Patrice Spath, ART, consultant in health care quality and resource management with Brown-Spath Associates in Forest Grove, OR. Currently, however, there are no indications that the Joint Commission is planning to raise prices for those services.
"Every year, the board looks at revenue, revenue opportunities, fees, and so on as part of their budget strategy," Massaro says. "I won’t try to second-guess where the board is going to go or what their decision will be [regarding fee increases]."
"I think the Joint Commission is trying to make any disruption as small as possible and to continue building the relationships they’ve established with the organizations they’re working with," Nielsen says.
In any case, don’t expect any major shifts in policy or organizational philosophy as a result of the reorganization, Spath says. "I think the thing that will keep the consistency from the standards standpoint is that Paul Schyve was put over that area [the research division]. He has a lot of history with the Joint Commission, and his philosophies have impacted the standards for years."
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