UAMS Hospital Loses $3.8 Million In First Half Of FY 2012

The University of Arkansas for Medical Sciences Medical Center lost $3.8 million for the six-month period that ended Dec. 31.

During the same period in 2010, the hospital had a net income of $5.86 million. Revenue is also down 1.4 percent to $276.6 million in the first six months of fiscal 2012.

UAMS Chancellor Dan Rahn attributed the losses to a shortage of business — not enough patients coming to the hospital. He also said a higher percentage of those patients who did come to UAMS didn’t have insurance, a problem other hospitals are encountering.

“We’re focusing on how we can afford to take care of as many uninsured patients as we currently have, and that’s a real challenge for us,” Rahn told Arkansas Business last week.

The percentage of uninsured patients jumped from 12.2 percent in fiscal 2011 to 15.9 percent in the current fiscal year. That is costing the hospital about $800,000 a month in revenue, said Dick Pierson, vice chancellor for clinical programs and executive director of the UAMS Medical Center.

The unreimbursed care accounted for 16 percent of the hospital’s $550 million budget, while the median for other teaching hospitals across the country was 5.5 percent, Rahn said.

Still, Rahn expects the hospital to "break even" by the end of the fiscal year on June 30.

Plans to cut expenses include eliminating the equivalent of 50-70 positions by reducing overtime and not filling vacant positions, Pierson said. The hospital currently has 3,319 employees.

Rahn said the hospital eked out a profit in January because more patients visited the hospital.

Also, UAMS recently signed a contract that will save it $10 million on supplies during the next two years, according to UAMS CFO Melony Goodhand.

Rahn said UAMS was looking for more money from the state. Gov. Mike Beebe has committed an extra $600,000 for UAMS in his budget proposal, Rahn said, but that hasn’t been approved yet. The state of Arkansas accounts for 9 percent of UAMS’ revenue.

“Every little bit helps,” Rahn said. “But we’re also trying to develop a long-range strategy on how this will be sustainable.”

He said having more people with health insurance would help the hospital’s finances. But uncertainty surrounds the federal Patient Protection & Affordable Care Act of 2010, which would require most people to have health insurance by 2014, as it makes its way to the Supreme Court this year.

UAMS also has seen an increase in emergency room visits. Since UAMS opened its 10-story hospital in January 2009, trips to the ER jumped from an average of 3,286 per month in fiscal 2008 to 4,516 in fiscal 2011, according to UAMS’ audit for the year ending June 30.

Consulting Firm

Rahn said UAMS’ financial health would have been worse if it hadn’t been for Navigant Consulting Inc. of Chicago.

In February 2010, UAMS hired the consulting company to comb through its revenue and expenses to improve the bottom line. Navigant projected it could save UAMS $42 million. At the time, UAMS was losing about $3 million a month.

From February 2010 through April 2011, though, Navigant said it saved UAMS $46.6 million by trimming expenses and increasing revenue, according to a May 6, 2011, report from Navigant, released to Arkansas Business under a Freedom of Information Act request.

Goodhand said the savings could be found in the financial statement for UAMS, but the cuts in expenses and increased revenue extend over two fiscal years. For the fiscal year that ended June 30, 2011, UAMS’ operating loss was $29.4 million, compared with $58 million for the year that ended in mid-2010, a $28.6 million improvement.

Still, UAMS — the hospital and the educational institution combined — had another $71.6 million in non-operating revenue (state appropriations, gifts and investment gains) that more than offset the operating loss, leaving $42.2 million in income for the year that ended June 30, 2011. That compares with $20.3 million a year earlier.

UAMS has spent $11.6 million on Navigant’s services so far, according to a UAMS spokeswoman.

Pierson said that searching for ways to trim costs while trying to boost revenue would never stop. “This continual trying to become more efficient while maintaining high quality and [keeping] patients happy is what the future is all about,” he said.