Less than two years after University Medical Center received $25.5 million in loans and eliminated hundreds of positions, the hospital is in the midst of a financial “rebirth,” according to CEO Mason VanHouweling.
At a meeting of the Clark County Commission this month to review the preliminary 2017 general fund budget, the county revealed UMC is expected to receive a $31 million subsidy — the same subsidy it received for the 2016 fiscal year and far less than it requested in years past.
VanHouweling said the hospital has been able to “turn a financial corner” in recent years.
UMC requested $25.5 million in loans to address its negative cash flow in fiscal year 2014, according to county records. That money, which county officials suggested be reinvested in the hospital, was repaid by May 2015, UMC spokeswoman Danita Cohen said.
The county also increased the hospital’s fiscal year 2015 subsidy from $41 million to $71 million as the population of Medicaid patients expanded under the Affordable Care Act.
As the hospital attempted to reduce the amount of taxpayer money it was consuming, UMC laid off hundreds of employees and made other adjustments including the elimination of some clinics and services in late 2014. It also renegotiated managed care contracts early last year, VanHouweling said.
The implementation of the Affordable Care Act also significantly reduced the number of uninsured patients at UMC, he said.
“They’ve been able to wrap their arms around it and get it under control,” UMC Board of Trustees Chairman and Clark County Commissioner Lawrence Weekly said of the hospital’s finances.
Weekly said the county had difficulty justifying the funding requested by UMC in the past and added that the reduction speaks volumes to the fiscal responsibility of those in charge of the hospital.
As a facility that serves a large number of indigent patients, the hospital requires at least some funding from the county to function, Weekly said.
“It was never designed to generate the type of revenue that private hospitals today can generate,” he said.
The subsidy the hospital received from the county in previous years was largely used to cover operating expenses, VanHouweling said. Now, the hospital’s operating expenses account for about $10 million of the $31 million total subsidy.
That $10 million is being set aside to cover projected costs including expenses related to employees’ retiree health plans.
The remainder of the requested subsidy will go toward UMC’s short-term capital budget requirements, which total about $60 million, according to the county’s budget numbers.
UMC is planning to modernize and remodel infrastructure at its main campus as well as at its primary and quick care facilities. The hospital also plans to move to a new electronic health records system and upgrade technology in operating rooms, VanHouweling said.
“If we maintain the course that we’re on, the community can be very proud of UMC,” VanHouweling said.
He added that the hospital is carefully watching for any possible reductions to disproportionate share hospital, or DSH, payments, which help to offset the costs of care given to indigent patients. DSH payments are expected to be reduced nationwide, which would hurt UMC.