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 operating loss in the first six months was due in part to a continued increase in the amount of charity care that UAMS provided in the months leading up to the official start of the Obamacare era. Charity care reached $86.2 million, a 28.1 percent increase from the same period a year ago.

“We do think it’s going to be significantly less” in the second half of the current fiscal year, Rahn said.

If Rahn’s strategy to improve the bottom line doesn’t work, however, UAMS will be forced to consider layoffs.

“We are not planning layoffs,” Rahn said. “We’re not preparing for layoffs. But it’s always a possibility. We cannot run a deficit.”

UAMS currently is one of the state’s largest employers with 10,177 workers.

Financial Hits

For the fiscal year that ended in mid-2013, UAMS had, after adding in state money, gifts and investment income, $12.8 million in income, compared with a loss of $7.99 million the previous fiscal year.

UAMS’ finances, though, would have looked worse in fiscal 2013 had it not been for an IRS refund of $13.5 million, a one-time rebate for taxes UAMS paid on services performed by medical students between 1996 and 1999. Also during the fiscal year, UAMS removed a $6.7 million liability tied to non-classified employees receiving sick leave pay when they retire.

Those two items kept UAMS in the black last year. Otherwise, the bottom line — including operating losses and all offsetting revenue — would have been negative $7.3 million, according to its audited financial statement.

Rahn said that in the first half of the current fiscal year, UAMS — like other health systems around the country — has had to deal with Medicare reimbursement rates that weren’t what administrators had hoped for. To help pay for the Affordable Care Act, the growth rate in federal Medicare reimbursements took a hit. For Arkansas hospitals, that means missing out on $2 billion to $2.5 billion in Medicare revenue during the next decade.

Another blow came to UAMS’ financial statement from the National Institutes of Health, which lowered the payment to UAMS in the first half of this fiscal year by 7.6 percent to $45.9 million.

Part of the decrease was tied to the government shutdown in October and a drop in NIH’s budget as a result of the federal budget sequestration.



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