Monday, February 27, 2017

Deficit forces UMMC to cut budget

The University of Mississippi Medical Center announced that it will cut $24 million from its budget in an email sent to employees recently.  Vice-Chancellor for Health Affairs Dr. LouAnn Woodward blamed the budget cuts on a loss of DSH funds.*  The email states:


TO: All Faculty and Staff

FROM: Dr. LouAnn Woodward, Vice Chancellor for Health Affairs

SUBJECT: Financial Action Plan

For the last few months we have been closely watching our financial situation as we’ve experienced unanticipated cuts to our revenue. Late this afternoon I met with about 100 senior administrators to announce an action plan to improve our financial position for the remainder of the fiscal year that ends June 30.

By March 6, I have asked for detailed plans from all divisions that will allow us to save approximately $24 million during the next four months. At the administrator’s discretion, these savings can be achieved through a combination of expense reductions or revenue increases, but the reality is that most of it will likely come from expense cuts.

Knowing that our hospitals have been working hard on labor expense management, I am protecting bedside patient care from this cut. All other measures to meet this savings goal are on the table, including eliminating programs and reducing the size of our workforce. Regrettably, we will not be able to reach our financial goal without some reductions in staffing.

As I mentioned in a recent VC Notes, a number of factors have contributed to our present financial difficulties. Chief among these is a decrease in our disproportionate share (DSH) funding, which we receive through the state Division of Medicaid for providing care to large numbers of Medicaid and uninsured patients. Our DSH allocation is always difficult to predict, but this year it currently stands at $35 million below our initial projection.

On top of that cut, as of Tuesday we now have received more than $8.2 million in reduced state funding for the current fiscal year. Revenue cuts of this magnitude, although painful, would be manageable in a normal year, but coupled with the DSH reduction they require a more aggressive response.

Even as we’ve experienced these reductions in funding, we have been working on a number of projects to decrease expenses or increase revenue. As was reported in Monday’s eCV newsletter, our value analysis teams have achieved $19 million in supply chain savings since 2015. Other groups have been working hard to improve revenue cycle management, shorten length-of-stay, and drive clinical quality improvement and the savings it yields. These and other efforts to become a leaner organization will continue.

As we look to be more efficient, we can’t ignore the need to invest in our future. For example, we’ve grown our clinical programs substantially during the last two years, even though it will take some time for those investments to pay for themselves. We have to be thoughtful about how we shepherd our resources and look for opportunities that are sustainable and will move us toward our ultimate goal of improving our state’s health status.

You’ll learn more about the financial action plan as it develops at the unit level. I ask that you please be patient and let your administrators work through this process in an orderly way.

Our current financial challenges are not unique to us. Across the country, academic medical centers and other industry players are struggling to cope with a historic period of change and disruption. Clearly we have to continue to excel at our core missions of education, research and patient care and maintain the integrity and quality of those pursuits. But we also must sustain – for the rest of this year and beyond – sound business practices of expense control, wise investment and decisive action in a changing marketplace.

I want to be clear. Achieving this $24 million in savings will not “solve” our problem. The fact is that our revenue sources will continue to be under pressure, so this focus on cost will not end on June 30, 2017. In some ways, this is the “new normal” for us and for other academic medical centers.

The target I’ve set for us to reach by year-end will be hard on everyone. But it is achievable. We’ve faced bigger challenges before, and with everybody pulling together, we’ll face this one, too. Thank you for your commitment to UMMC.

* defines DSH funding:

Medicaid Disproportionate Share Hospital (DSH) Payments

Federal law requires that state Medicaid programs make Disproportionate Share Hospital (DSH) payments to qualifying hospitals that serve a large number of Medicaid and uninsured individuals.

Federal law establishes an annual DSH allotment for each state that limits Federal Financial Participation (FFP) for total statewide DSH payments made to hospitals. Federal law also limits FFP for DSH payments through the hospital-specific DSH limit. Under the hospital-specific DSH limit, FFP is not available for state DSH payments that are more than the hospital's eligible uncompensated care cost, which is the cost of providing inpatient hospital and outpatient hospital services to Medicaid patients and the uninsured, minus payments received by the hospital on or on the behalf of those patients.


Anonymous said...

Did they get a lesser share of the DSH money than they had expected or did the overall pot of money decrease by such an amount that their prorated decrease was $5 million?

Anonymous said...

Cut salaries by 10%

Anonymous said...

Correct me if I'm wrong; but, the school knew or was negligent in not understanding, that the state was NOT going to go along with the feds on the dramatic increase in medicaid numbers that were going to be force-fed by Obamacare. That being the case, the administration of this hospital failed to reasonably react to this reality as if it were simply going to go away. Or either they didn't believe what they were told. This was covered well in all of the media for two years.

Ima Prollem Solver.. said...

Cut out the top four administrative positions including the woman who wrote the memo. Put Steve Holland in charge of the hospital. He has years of experience with ambulances, caskets and embalming processes and these are the requisite healthcare skill set and demands of the occupation.

Anonymous said...

I think the fact that she had 100 senior administrators to talk to is part of the problem.

Anonymous said...

Not too long ago UMMC purchased a new $2.5M piece of (revenue generating) equipment and stored it in a box for so long that it became obsolete. They never figured out where to put it. You're not dealing with brain surgeons here. Oh, wait...

Anonymous said...

My husband has worked at UMMC for nearly 25 years. He has not had a pay increase in years due to budget constraints, has had to assume much greater responsibilities due to lack of adequate staffing, and works some squirrely work hours that involve being on call 24/7 with no compensation therefor. I suspect it violates wage and hour laws, but what the heck - at least he is employed, has health insurance and is allegedly earning state retirement. UMMC is so top-heavy with do-nothing administrators that they lack funding to hire employees who provide direct patient care. Dump the administrators for starters. The suggestion that wages be cut for the employees who actually WORK is ludicrous.

Anonymous said...

@12:50 - spot on

Anonymous said...

12:50 "I think the fact that she had 100 senior administrators to talk to is part of the problem."

You nailed it. Make the cuts from the top down and the problem will be solved quickly. They, like many others, have entirely too much "Administration" and "Management".

Anonymous said...

Boy, that $500 million per year federal medicaid expansion sure would come in handy right about now.

Anonymous said...

Yes it would 2:13. For one more year, then that can you are thinking would be good kicked down the road would be much, much heavier to continue kicking, and much more severe to fix. You remember, the feds were going to cover the cost for 3 years, until after Obama's administration was over. Damn good thing we didn't take that carrot, because the consequences would be damn severe upon its ending.

Anonymous said...

lets cut your salary 10%, we already make less than other hospitals

Anonymous said...

lets cut your salary 10%, we make less than other hospitals already. like the lady above said- ive been here 7 yrs and I have gotten a 37 cent raise since I have been here!

Anonymous said...

@12:50....I agree with you 100%!!

Self employed professional said...

Sorry about your 37 cent raise on your state salary. I've been at my work and have not gotten a raise in the last ten years. My cost for buying my insurance has gone up 165%, and I have been unable to put any money into a retirement plan. So, I'm not too sympathetic with the fact that people haven't gotten a raise during this wonderful economic boom we have supposedly seen over the past decade. But with inflation being supposedly zero, there is no reason that salaries should have been going up.

Anonymous said...

To piggy-back @ 3:12, the Milliman study said it would NET cost MS $100 million. Considering cost projections in other states were off by 50% or more, we could be looking at an additional $150 million to come up with next year (to go with all the other shortfalls).

Anonymous said...

3:12 "the consequences would be damn severe..." You mean consequences like our community hospitals wouldn't all be dead or dying right now.

Anonymous said...

1:16; Although all of which you said is no doubt the truth, your husband is more than likely exempt from the overtime provisions of the Fair Labor Standards Act...meaning he does not qualify for overtime pay due to his exempt status. I don't know his job title or duties so I'm guessing here.

Anonymous said...

Below is an article from this blog on Tuesday, January 12, 2016

WAPT reported that UMMC is adding helicopter service in areas where it already exists:

JACKSON, Miss. —The University of Mississippi Medical Center plans to add two medical helicopters, doubling its current fleet, but some other medical helicopter operators are protesting the plan.

The medical center plans to place one helicopter in southwestern Mississippi, possibly in McComb, and one to the north of Jackson, possibly in Starkville. The helicopters are a visual sign of UMMC's efforts to attract patients to Jackson, rather than see them go to large hospital systems based in New Orleans and Memphis.

The College Board approved the two additional helicopters at its December meetings over the protests of the Hattiesburg-based Southeast Mississippi Air Ambulance District. The district and others said the medical center is improperly competing with other entities already providing the same service. The $55 million contract with PHI runs until 2020.

Now some insight and analysis:

$55M contract over four years for four helicopters = $3.4M/helicopter/year for the aircraft, maintenance, and pilots. Flight nurses and flight paramedics are not included in this figure. That would add an additional $400,000/year/aircraft. Then, there's the hourly cost of operating the twin-engine aircraft (typically $400-$600/hour) plus the cost of jet fuel that is burned at a rate in excess of 40/gallons/hour and a current cost around $4/gallon.

Scaling back to the original two helicopters could save UMMC $2,500,000 be the end of the fiscal year, nearly 10% of the current budget shortfall.

Comically, IHL was told by UMMC representatives that this contract would pay for itself with patient revenues.

Anonymous said...

5:37 "Comically, IHL was told by UMMC representatives that this contract would pay for itself with patient revenues." Do you know that it didn't?

Anonymous said...

If UMMC were being just a "teaching hospital" like the Legislature intended, rather than competing with hospitals around the state for their business, I wonder what it and its budget would look like.

Anonymous said...

Wonder how many people Phil killed by turning down federal money.....

Anonymous said...

What 6:01 asked is important. Go read it.

Anonymous said...

IHL fired the wrong guy. IHL should have fired itself and Bryant. Jones is better off.

Anonymous said...

922. Truth

Anonymous said...

Occams Razor (from the dead speaks da truff). @922. Not sock puppetry. Just keeping it real...

Anonymous said...

ALL hospitals in the metro area (and the majority across the nation) have undergone periods of declining revenues. Baptist and St D have been forced to cut certain services and reorganize their business models to stop the bleeding. The Merit system only has 1 of 5 hospitals that are profitable and all 5 are for sale. The difference is Baptist and St D's were aggressively proactive in dealing with their financial woes, though more needs to be done. UMC is a bureaucratic behemoth that is not lean nor is quickly adaptable (i.e. poorly managed). Some of this is too many chiefs, some of it is believing "the State" will always have their back, some of it is simply business politics (the best talent is not in positions of authority). It's not for lack of effort in bringing revenue in... UMC is quicker to turn one over to a collection agency than any of the others, or in trying to raise their image (look at all the UMC billboards). Unfortunately the fact remains that UMC is a black hole that is difficult to schedule patients with from the outside and once in, the patient is never seen again and no information comes back to the referring doctor unless they go looking for it. UMC will scream they have a unique mission and that should count for something (it does, to a degree) but they are already paid for this from more than one source. UMC is unfortunately ill prepared for the changes coming in medicine over the next decade. Which is sad... they should be leaders.

Anonymous said...

5:37 is spot on. The helicopter deal is the biggest sweetheart deal ever, and all about ego. Vandy, Duke, , UAB have all outsourced their helicopter business, but not UMMC. They can do it better! Just like the hospital. All other reputable academic medical centers have turned their hospitals over to private management but not UMMC, they can do it better.

Toe Tag.. said...

Seems to me the only level 1 trauma center in the state might need the ability to 'copter in' wreck victims from around the state real quick like. Same reason Pafford positioned more ambulances in Madison County when they secured the contract to roll us to hospitals.

Clearly Dan Jones was sent to UMAA at the wrong time. He should have been left in place at UMMC and fired years ago. This place is larger than most towns in Mississippi and is ungovernable.

Anonymous said...

Toe Tag,

It's not a case of a lack of helicopter resources being available to transport sick patients. Here's the list of helicopter bases operating in Mississippi before UMMC's expansion:


These are nearby helicopter bases that frequently served Mississippi at the time of the expansion:
Memphis, TN
Delhi, LA
Semmes, AL
Slidell, LA

Since the UMMC expansion, I believe there have been additions in McComb and the Gulf Coast and the Winona base has closed.

Anonymous said...

Has anyone ever noticed that Dr. Woodward uses the word "I" a lot?

Chuck and P.T. said...

10:02 - Adding copters in Starkville and southwest Mississippi, as indicated would seem to fit the location grid you posted. By the way, we're not talking here about 'sick patients'. We're talking about trauma injuries where people might have two hours of life left, if that.

What's your beef?

Anonymous said...

Air Ambulance patients are routinely left with huge bills as most of them are out of network with most insurance companies. $25,000 - $40,000 bills are common. UMMC is in network with most physicians. This deal could be beneficial to rural trauma patients if they can avoid huge bills.

Anonymous said...

UMMC has made some very bad decisions in the past few years. They have built and leased off campus clinics that do almost nothing. I think it is all about the fact they spend money like drunken sailors and expect the tax payers to pick up the slack. UMMC was to be a teaching facility and not meant to be in competition with the local hospitals like Saint D and Baptist. All of the local hospitals spend money on real estate they have never used---we are talking tens of millions of dollars. I don't feel sorry for any of them but I do feel sorry for the people (us) that have to go there. Service and patient care is a "D" minus.

Anonymous said...

1:16 is ABSOLUTELY CORRECT! I just had an experience at UMMC. Released last week. Doctors were wonderful. Couldn't ask for better. However, the nurses were stretched so THIN that when you called for assistance you might see a nurse AN HOUR LATER. When you are flat on your back after a back procedure, you are hurting, wanting your scheduled and doctor-ordered pain meds, and have to go to the bathroom, waiting even 10 minutes is TORTURE.

UMC needs to invest more in patient care on the floor. The buildings are marvelous. But what do we really go to the hospital for. NOT the rooms or the view.

Let's Dig Up Colonel Reb.. said...

"Jones is better off"? Perhaps so, but who gives a rat's ass? He followed Khayat in doing his best to destroy one of our state institutions of higher learning just so he could get accolades from his peers in liberal states. He may or not be 'better off', but the rest of us are for sure.

Now come the Confederate haters in 3...2...1...

Anonymous said...

Cut all salaries by 20%

Robots are going to take over anyway.

Start doing heroin.

Anonymous said...

I blame Hugh Freeze

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If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

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