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Last month's message recounted the many challenges faced by the health care industry, and the specific strategy Catholic Health East has embarked upon to best prepare and position our health care ministry for the future. As you'll recall, CHE has implemented a single strategy with two concurrent paths: A & B. Path "A" represents the active pursuit of CHE's current strategic plan, and "B" calls for exploratory/collaborative discussions with other Catholic health systems. Both paths are consistent with our 2017 Goals and Strategies. Our focus on Path A—the active pursuit of CHE's current strategic plan—requires the continued, focused implementation of the ministry assessment outcomes; this is occurring right now at each RHC. We're also actively pursuing growth opportunities in four key ways: networking locally to develop local scale and leverage; growing existing services; developing new services in existing markets; and stepping into new markets. A key component necessary to the success of Path A is our continued, accelerated direction towards systemness, standardization and centralization—where there is value. In CHE's recent State of the System web cast, we compared CHE's key operational and financial performance metrics to those of the other major Catholic systems around the nation. I pointed out that, while CHE has strong performance in many areas (such as quality, patient satisfaction, and many others), our system has not performed as well on financial measures as other Catholic systems. When we analyze the possible reasons behind this, one key difference that emerged is the fact that, in comparison to most other large Catholic health systems, CHE has been structured as a relatively decentralized operating model. While we have successfully centralized several key transactional processes in the past, it is clear that additional opportunities remain to strengthen our "systemness" so that we can collectively achieve greater efficiencies and operating effectiveness. This became clear during our current 2008 budgeting process. As the RHCs and the System Office independently constructed their 2008 budgets, it became evident that there was a developing disconnect between the two processes. We reviewed the last few years of the System Office budget and noted that, while there were several new programs and initiatives launched focused on improving services at the local level, the investments in these new programs were not consistently mirrored by either cost reductions or revenue enhancements at the local level. Rather than a true integration of some of these programs and services, we were experiencing a "layering" effect, where some of these well-conceived and worthwhile efforts were being unnecessarily duplicated at the System and RHC levels. To eliminate this phenomenon, beginning in 2008, we will no longer have a System Office budget; instead, there will be an annual System Office component of the system budget. This will be treated on an equivalent basis to the RHC component of the system budget. Our intention from now on is to address our budget issues through integration, not "layering." This revised process promises to focus more system resources to support local leaders in their RHC/JOA-specific endeavors, and avoid duplications of roles and services at the System Office and RHC/JOA levels. We initiated this new process at a recent budget meeting attended by all RHC/JOA CEOs. At this meeting, System VPs reviewed their proposed 2008 budgets and reviewed new opportunities for improving operations and financial performance. Senior Management Team and RHC/JOA CEOs then discussed, analyzed, and provided input to the recommendations. Where are we in the process? At this point, all leaders—RHC and System Office—are now working towards development and implementation of a system-wide budget for 2008. We will continue the rollout of system-wide savings opportunities through 2008, develop and implement to measure our results, and work to capture our gains and share successes and learnings throughout CHE. Thank you for all of your hard work, dedication and efforts to strengthen our health ministry and to help us all to be a transforming, healing presence in the communities we serve.
Sincerely yours,
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