UAMS Operating Loss May Top $46 Million

by Mark Friedman  on Monday, Oct. 6, 2008 12:00 am  

The University of Arkansas for Medical Sciences will open its $150 million nine-story hospital in January. The Patient Tower will feature larger patient rooms, an emergency department, a clinical lab and a a radiology department.

The University of Arkansas for Medical Sciences, which will unveil its new $150 million hospital in January, is projecting a $46.25 million operating loss for its current fiscal year, a figure that has almost quadrupled in four years.

The new hospital features 234 adult beds and 64 neonatal beds and is the centerpiece of several construction projects on the campus. A new five-story, $26.3 million Psychiatric Research Institute with 40 inpatient beds will open about the same time as the hospital.

It is unclear, though, exactly how much the new hospital and the related projects have contributed to the escalating operating loss at the university.

For UAMS fiscal years 2010 and 2011, which end on June 30 of those years, the operating loss is projected at $41.21 million and $43.08 million, according to an internal forecast provided in response to a request by Arkansas Business.

The state's medical school and its affiliated hospital anticipate making up the operating losses through "nonoperating" revenue – primarily appropriations from the state Legislature, donations and interest. Indeed, UAMS is projecting overall net income of $1.5 million for fiscal 2009, which started July 1, and $4.6 million and $5.1 million for the next two fiscal years.

Still, the projected operating deficits have raised some concerns with Dr. Carl Johnson, a member of the University of Arkansas Board of Trustees and chair of its hospital committee.

"I have a lot of issues with the budget situation," Johnson told Arkansas Business last week. "I think that we did a bigger undertaking of approving an increase in their building of a new hospital.

"And I'm sure the new hospital being built may have some impact on the $40 million deficit," he said. "But it hasn't been made clear to me where this big loss is coming from."

There was no way to determine how much the new hospital was contributing to the operating loss, said Melony Goodhand, vice chancellor for finance and chief financial officer.

"The campus does the human resource function and marketing function, facilities maintenance and accounting [for the hospital]," Goodhand said. "We look at it all rolled up."

She attributed part of the rise in the operating losses, though, to an increase in the number of students enrolled at UAMS and a rise in indigent care.

UAMS provided about $101 million in charity care for the fiscal year ending in 2007, which was up 25 percent from its 2006 fiscal year, according to the University of Arkansas System's financial statement for the fiscal year ending in 2007.

UAMS Chancellor I. Dodd Wilson said the operating loss doesn't have anything to do with the new hospital.



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