UAMS Chancellor Dan Rahn Attacks Red Ink With Balanced Budget Plan

by Mark Friedman  on Monday, Feb. 17, 2014 12:00 am  

UAMS Chancellor Dr. Dan Rahn said he has a plan to slash expenses and increase revenue that should generate $40 million for the campus during the next 18 months. (Photo by Jason Burt)

The University of Arkansas for Medical Sciences had an operating loss of $27.8 million in the first six months of its current fiscal year, a dramatic downturn from an $8.5 million operating gain during the same period a year earlier.

Dr. Dan Rahn, the chancellor of UAMS, said he has a multi-point strategy to increase revenue and slash expenses that should generate about $40 million for UAMS during the next 18 months.

“We’re dealing with some fundamental changes,” Rahn told Arkansas Business last week during an interview in his office at the UAMS Medical Center. “The financial model that we’ve relied upon for the past decades is changing, and we’re going to have to change.”

Rahn said the UAMS campus, including components such as the hospital, the Winthrop P. Rockefeller Cancer Institute and the medical colleges, has enough money to pay its bills, but the balance sheet is “an indication that things need to change.”

He said it’s critical that the state Legislature continue funding the “private option” Medicaid expansion, which is being debated in the fiscal session that began last week.

Gov. Mike Beebe’s proposed budget sends $86.4 million to UAMS for the fiscal year that starts July 1, which is $7.6 million less than the current fiscal year.

“The reason for that decrease is … we think that will be made up and then some by the private option,” the governor’s spokesman, Matt DeCample, said.

But if funding for the private option isn’t extended beyond June 30, “it’s obviously one of the many things we’ll have to revisit,” DeCample said.

If the private option isn’t funded, UAMS’ Chief Financial Officer William Bowes said, UAMS will have to brace for a 3 percent cut in funds starting July 1.

More than 100,000 Arkansans had been insured under the private option as of last week.

UAMS had previously estimated that about 75 percent of its previously uninsured patients would have health insurance during the second half of its fiscal year because of the private option and the Affordable Care Act’s individual mandate. But now, Rahn said, “I think it’s probably overly optimist for the first year.” He said probably about 60 percent of the previously uninsured patients would have health insurance this year.

Still, Rahn said, UAMS expects to receive about $28 million in revenue from newly insured patients in the second half of the current fiscal year.



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