UAMS Turns Corner, Slashes Annual Loss

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

In an attempt to trim expenses, UAMS in October stopped replacing employees who left, said Richard Pierson, UAMS vice chancellor for clinical programs and executive director of UAMS Medical Center.  

In November, when Rahn became chancellor, one of his first moves was to freeze wages for about 3,300 employees and rescind raises given on employment anniversaries earlier in the fiscal year.

"I was hopeful that we would see results dramatically," Rahn said.

But the wage freeze and the continued shedding of positions weren't enough to balance the budget. Between July and December 2009, the hospital lost nearly $18 million.

Rahn said UAMS couldn't wait longer to see if its cost-cutting measures would work. UAMS then called in outside help to manage the hospital more efficiently.

In February, Rahn went to the Legislature's Joint Budget Committee for permission to hire Navigant at a cost of about $800,000.

Rahn said it was not uncommon for hospitals to hire consultants to help improve their finances.

For instance, the University of Alabama at Birmingham Hospital hired Navigant in 2009 to review its performance. After it put into practice all the suggestions Navigant made, including eliminating positions and scheduling changes, the medical campus is saving about $15 million to $18 million annually, according to an e-mail to Arkansas Business from Dale Turnbough, a spokesperson for UAB.



After studying the hospital, Navigant said it found ways that would "provide greater than $40 million to the bottom line," according to Navigant's five-page report to UAMS. The five-page report is the only written report given to the hospital, according to spokeswoman Taylor.

"The reason is because we went straight from Phase 1 into work groups which are made up of UAMS faculty and staff with assistance from Navigant," she said in an e-mail to Arkansas Business.



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