New UAMS Chancellor Attempts to End Losses

by Mark Friedman  on Monday, Nov. 30, 2009 12:00 am  

Dr. Daniel Rahn says UAMS has "to operate within available resources, and in the recent past we have had expenses outstripping revenue in a number of arenas."

Accounting at public hospitals and medical schools can be complicated, but no matter how you slice it, the University of Arkansas for Medical Sciences had a rough year.

Chief Financial Officer Melony Goodhand says the state's medical school and public hospital managed to squeak out "a positive bottom line of $4 million" for the year that ended June 30. But to get to black, Goodhand had to include more than $47 million in earmarked capital gifts, money that can't be used for salaries or utility bills and which UAMS has not traditionally included in its "bottom line."

While Goodhand puts the best possible spin on last year's numbers, UAMS' new chancellor, Dr. Daniel Rahn, is coldly candid about the current state of affairs.

Confirming information that had been shared with certain employees in recent weeks, Rahn said the hospital unit, UAMS Medical Center, has been losing money in the current fiscal year, which began July 1, and had lost about $2.8 million in October alone.

UAMS has "to operate within available resources, and in the recent past we have had expenses outstripping revenue in a number of arenas," Rahn said. "We're now correcting that and getting back on track. Our commitment is to do that without adversely affecting our continued forward progress as an academic health center."

Rahn, who succeeded Dr. I. Dodd Wilson as UAMS chancellor on Nov. 2, said he had several plans to turn the campus' finances around, and he hasn't ruled out layoffs.

Within days after he was installed as chancellor, UAMS Medical Center froze wages for about 3,300 employees and rescinded raises given to employees whose employment anniversaries rolled around in July through October.

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Fiscal 2009
In fiscal 2009, UAMS had about $1 billion in revenue and an operating loss of $78.7 million, which was $32 million worse than projected.

Administrators tend to dismiss the operating loss figure, which had been $12.9 million just four years earlier, because it doesn't include state government subsidies or donations that can be used for general expenses. But even when those things are included, UAMS had a net loss of $43.1 million last fiscal year, when a net income of $1.5 million had been projected.

Even granting that $14.6 million of that $43.1 million came from investment losses during the stock market swoon, the net loss was still $28.5 million - a $30 million negative swing from a projection UAMS provided to Arkansas Business just nine months earlier.

A financial statement for the past two fiscal years was completed on Oct. 15, and it predicts that "at best" UAMS will break even in the current fiscal year.

"Additionally it may be necessary for UAMS to liquidate investments to meet operating cash flow needs and/or to provide funds to complete the construction of the Winthrop P. Rockefeller Cancer Institute Tower," the financial statement said.



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