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UAMS Eyes Expansion, Sees Increase in Patient Demand

7 min read

The Affordable Care Act as applied in Arkansas has worked so well for the University of Arkansas for Medical Sciences that administrators are considering expanding the 10-story UAMS Medical Center.

The 494-bed hospital stays nearly full and can take only about 70 percent of the requests for patient transfers from across the state, UAMS Chancellor Dan Rahn told Arkansas Business in a recent interview at his office.

“We feel it’s important for us to accept hospital-to-hospital transfers,” Rahn said. “It’s an important part of our mission, but if we don’t have the bed, we can’t accept them.”

Roxane Townsend, CEO of the UAMS Medical Center, said the hospital will hire a firm to conduct a financial feasibility study to determine the cost of adding space above the emergency room at the hospital.

The 540,000-SF hospital was opened in 2009, and the pilings in the emergency room were constructed to support expansion if needed.

The study will also look into the cost of building an ambulatory surgery center on an 11.3 acre-site at Cantrell Road and Rodney Parham. The UAMS land currently is vacant.

The financial projections are expected to be ready at the end of the summer, but as of Wednesday, a company hadn’t been hired to do the work, UAMS spokeswoman Leslie Taylor said in an email to Arkansas Business.

Rahn said it was critical to keep the ACA’s expanded health insurance coverage in place for the approximately 270,000 Arkansans who were previously uninsured but now have insurance.

Health care reform, though, has been the target of repeal attempts since it was signed into law in 2010. It has already survived one challenge at the U.S. Supreme Court, but the Supreme Court did throw out the part of the law that required states to expand Medicaid, primarily with federal dollars.

Arkansas accepted the federal money, crafting a unique approach to Medicaid expansion known as the “private option.” But continuation of that program is far from assured.

In the meantime, UAMS has been expanding its network of satellite clinics in response to increased patient demand. Last week, the UAMS Orthopedic Clinic opened in west Little Rock. UAMS is scheduled to open a primary care clinic in Maumelle in November and another one in the Victory Building in downtown Little Rock in January, Taylor said.

Townsend said patients’ improved ability to pay for health care is one of the reasons the medical center’s operating income was $4.2 million for the six-month period that ended Dec. 31. The medical center had an operating loss of $1.6 million during the same period in 2013, which was before key features of the ACA were in place.

Overall, the UAMS campus — including colleges, the hospital and the Rockefeller Cancer Institute — had an operating loss of $11.6 million for the six-month period ending Dec. 31, which was the first six months of the current fiscal year. As bad as that sounds, it compared very favorably with an operating loss of $27.8 million for the same period in 2013.

“We’re doing better on the hospital side, but not sufficiently better that we can cover the other expenses and reductions that we’ve had,” Rahn said.

Through the first nine months of the current fiscal year, which started July 1, UAMS has an operating loss of $7.6 million, and the goal is to get into the black, Rahn said.

“We’re a lot closer than we were,” he said. “But we’re not there yet.”

Patients With Insurance

Townsend said revenue from newly insured patients was one of the main reasons for the hospital’s financial improvement in 2014.

Beginning Jan. 1, 2014, the centerpiece of the legislation known as Obamacare required individuals to have health insurance and offered assistance for those who couldn’t afford it on their own.

In December 2013, 13.7 percent of the Med Center’s patients were uninsured, Townsend said. “Today, we’re running less than 3 percent uninsured.”

The bills for patients who don’t have insurance have plummeted almost as much. In calendar year 2013, the self-pay charges at UAMS were $148.4 million; in 2014, the total fell to $53.7 million.

The hospital has an occupancy rate of more than 90 percent on most days, Townsend said. The industry considers a hospital full if it’s more than 85 percent occupied, she said, because vacancies may not be in the areas where the demand is.

“We could be full in the critical care unit, or we could be full everywhere but nursery,” Rahn said.

The hospital has 64 infant beds in its neonatal intensive care unit.

The lack of open beds has resulted in the hospital denying requests to take patients from other hospitals around the state. The hospital receives about 300 requests a month for hospital transfers, but UAMS has had to refuse about 30 percent of those in recent months, Rahn said.

Townsend said she doesn’t know where those patients end up. The patients could receive treatment at another Little Rock hospital or one out of state, she said.

Electronic Health Records

Net patient revenue for the six months that ended Dec. 31 was $300.3 million, up 8.5 percent from the same period a year ago. Part of that increase is due to a new electronic health records system that the hospital began using in July 2013 in limited areas and that was then rolled out to the entire campus in May 2014.

The total price tag for the Epic Systems Corp. of Verona, Wisconsin, was about $100 million. Using it helps capture billable procedures that the hospital might have missed before the system was in place, Townsend said.

Years ago, as doctors made their rounds, they jotted on a slip of paper which patient they saw.

“They would have to remember to transfer that [paper] to a charge sheet at the end of the day,” Townsend said. “So it was easier to lose charges.”

Now all the patient information is recorded electronically.

“Our bills are better and more accurate” with EPIC, she said. “We’re not losing charges, especially on the physician side, and so that has made a difference in our revenues.”

The next upgrade for EPIC is scheduled to start in September.

“It’s a wonderfully robust electronic health information infrastructure,” Rahn said. “Having all processes of the clinic enterprise on the same system was really important for us.”

Clinic Growth

UAMS’ clinics are also seeing growth. On May 11, the UAMS Orthopedic Clinic opened at 2 Shackleford W. Boulevard.

In July, UAMS opened its Neighborhood Clinic at 1811 Rahling Road in Little Rock, offering primary care for pediatric to geriatric patients. Specialty care, including cardiology, urology and neurology, is also offered at the clinic.

Townsend said UAMS added clinics because its patients wanted easier access to health care offices.

“We are a big campus with lots of buildings, and we’re tough to navigate,” she said. “A lot of people really prefer to get their care a little closer to their neighborhood. … So we’re trying to accommodate our patients.”

UAMS Health

The UAMS system has seen its financial health improve during the first six months of its current fiscal year compared with last year, but it still had an operating loss of $11.6 million.

For the fiscal year that ended on June 30, 2014, UAMS had — after adding in state money, gifts and investment income — a loss of $19.1 million compared with a gain of $12.1 million the previous year.

Chief Financial Officer William Bowes told Arkansas Business that most of the operating loss stemmed from depreciation of assets.

For the current fiscal year that ends next month, UAMS’ depreciation expense is projected at $64.4 million. Last fiscal year, it was $56.8 million.

Rahn said the UAMS campus also has had to deal with a reduction in state support.

“Our state appropriation is $9.2 million less than it was in 2013,” Rahn said.

UAMS’ revenue streams include patient services, student tuition, state appropriations, research grants and gifts.

Legislative Task Force

In March, 12 Republicans and four Democrats were named to a legislative task force to study the private option, which uses federal Medicaid expansion funds to buy private health insurance for Arkansans who earn up to 138 percent of the federal poverty level.

The federal government will pay all of the costs for the expansion through 2016, and then gradually decrease its share of the funding to 90 percent, leaving the state to pay 10 percent.

The task force is required to issue its recommendations by the end of this year.

“We have a very big stake in how this gets decided because of our responsibility to the public,” Rahn said.

UAMS also relies on patient care revenue to subsidize its education and research, he said.

State Sen. David Sanders, R-Little Rock, is on the task force. He told Arkansas Business last week that the members will consider a number of issues involving the private option, including “what direction we’re going to go long term.”

Sanders said the task force will compare the private option’s performance with projections made when it was approved by legislators in 2013.

And the overall impact of the private option will be considered, said Sanders, who also is the chair of the Arkansas Health Insurance Marketplace Legislative Oversight Committee.

“We’re looking at developing a strategy that works for Arkansas,” he said.

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