UAMS Turns Corner, Slashes Annual Loss

by Mark Friedman  on Monday, Oct. 4, 2010 12:00 am  

The University of Arkansas for Medical Sciences Medical Center lost $28 million in fiscal 2009 and was, its chancellor said, on track to lose $36 million in fiscal 2010.

Instead, its loss for the year that ended June 30 was cut to $3.34 million, and Chancellor Daniel Rahn said UAMS' hospital, University Medical Center, had reported net income of $1 million to $4 million a month since March.

UAMS credits the hospital's improved financial health partly to Navigant Consulting Inc. of Chicago, which was hired in February.

UAMS has made some hard choices, like leaving positions open and ending a popular but costly work schedule for nurses. But some of the changes seem simple and obvious: Millions of dollars in savings have been found by finding better prices on medical supplies, and millions in new revenue have been produced through stricter compliance with insurance requirements on patient pre-certification and procedure coding.

Twenty to 30 Navigant employees are expected to stay on the campus and work with UAMS for another nine months on the improvement plan. UAMS has paid the consultants $1.68 million through Sept. 10, and Chief Financial Officer Melony Goodhand said the consultants would be paid a total of $7.5 million.

Since July 2009, 386 positions have been eliminated from the hospital, without layoffs, which reduced expenses by about $2 million a month, Goodhand said. UAMS has 9,413 employees, of which 3,141 work at the hospital. 

UAMS expects to see a savings on expenses of $47.7 million for its current fiscal year, which began July 1. It's unclear, though, what that expense savings will mean for its operating margin, which showed an operating loss of $43.1 million for the year that ended in mid-2009.

"We are in the middle of recasting our budget to reflect the recent improvements in both revenue and expenses," UAMS spokeswoman Leslie Taylor wrote in an e-mail to Arkansas Business. "We did the hospital budget back in March before the improvements were identified."

The financial picture of the overall UAMS campus also improved for the fiscal year that ended in June. It showed an operating income of $20 million, thanks in part to an investment income of $15.9 million, according to Taylor. For fiscal 2009, which began just before the stock market crash of 2008, the investment losses were $14.6 million.

Still, Rahn, who succeeded I. Dodd Wilson as chancellor in November, told Arkansas Business that UAMS had more improvements to make.

"Many of the things that we have implemented were really in the works when I hit the door," Rahn said. "This is a team effort and there's always room for improved efficiency, so it's a never-ending process."

He said he would like to build UAMS' cash reserve. As of August, the reserve held $155 million, up from $110 million in November.



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