DMC announcing layoffs today to provide more dollars for patient care

The Detroit Medical Center is announcing Monday a long-planned organizational reboot that that will simplify its management structure and result in what could be significant job reductions.

The exact number of jobs that will be cut was not disclosed. DMC has eliminated about 100 positions per year for the past three years in year-end cost-cutting, but this year's reductions are expected to be deeper, perhaps around 300.

That would amount to about 3% of DMC's 11,000-person workforce.

Dr. Tony Tedeschi, CEO of the DMC, announced the reorganization in a memo to the staff of the multihospital system.

"Today we are announcing changes to our organizational structure that will make DMC a stronger health-care system and plans for new investments in our future, both of which will allow us to better serve our patients and meet the changing needs in our community," Tedeschi told the staff in his memo, which was provided to the Free Press for release Monday.

"These organizational and leadership changes also means we will reduce our workforce in coming weeks over the next month," Tedeschi's memo read. "These decisions are extremely difficult and we do not take them lightly, but they are necessary to align DMC with the health-care landscape today and to ensure we can invest in opportunities for DMC’s future."

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The organizational changes will come mainly in the managerial ranks as DMC tries to simplify or "flatten" its administrative structure and direct more resources to patient care.

"Realistically, we won’t be able to place every displaced associate in a new job within the company, but we will make every effort to place as many as possible," Tedeschi said in his memo. 

The DMC is owned by Dallas-based Tenet Healthcare. The DMC system includes Detroit Receiving Hospital, Sinai-Grace, Children's Hospital, Harper Hutzel and others. It also serves as the training ground for student doctors at Wayne State University's School of Medicine.

The need for a reboot stems broadly from two trends that challenge not only DMC but many other health systems across the nation.

First, hospital admissions are trending lower as more outpatient options become available to patients. Since outpatient services produce less revenue, that has put financial pressure on hospitals. At the same time, more of the patients who are admitted to hospitals are covered by government insurance programs that tend to pay less than private insurance.

And, second, DMC hopes to improve its quality and patient satisfaction scores across all of its hospitals.

"As a result of these local and national trends in health care, and the challenges they have created, Tenet Healthcare has undertaken companywide plans to meet these new realities head on," Tedeschi said in his memo. "And Tenet is not alone in the health-care space, as other hospital operators are taking similar actions."

Tedeschi outlined several improvements that he expected the reorganization to achieve. Among those:

• Significantly reduce readmissions to the hospitals after a patient has been sent home.
• Improve patient satisfaction rates and patients' "willingness to recommend" DMC to others.
• Develop new outpatient options for consumers.
• Reduce to zero so-called "preventable harm events" where patients can be damaged during a visit to the DMC.

In recent years, DMC has invested hundreds of millions of dollars in new infrastructure, including a new tower at Children's Hospital. But it has also struggled with quality problems, including violations of health codes involving dirty surgical instruments that caused DMC considerable bad publicity over the past couple of years, problems DMC has said it has solved.

And in late 2017, the Michigan Nurses Association sued DMC's Huron Valley-Sinai Hospital in Commerce Township claiming that there were dangerously low staffing levels that could harm patients. DMC denied that and said staffing levels were proper and patients were safe.

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"We will and we must continue to invest strategically in our business to enhance our medical care services, respond to the needs and preferences of the community, strengthen our competitive position and grow our patient and revenue base," Tedeschi said in his memo.

"As we do that, however, we must flatten our organization to increase accountability and improve operations. Improving efficiency will lead to cost savings that enable DMC to continue to invest in its future; and by increasing accountability and improving operations, we will drive improvements in care delivery and patient satisfaction."

Contact John Gallagher: 313-222-5173 or gallagher@freepress.com. Follow him on Twitter @jgallagherfreep.