UMC loses more than $70 million for third straight year

For the third straight year Clark County’s University Medical Center of Southern Nevada posted an annual operating loss exceeding
$70 million — with no prospect for immediate improvement.

The hospital has cut spending, most recently with a pay freeze for nonunion clerical staff, pharmacists and laboratory workers starting Oct. 1. That has driven down costs by more than $40 million a year from 2009 levels.

But the number of patients checking into UMC, and how much they pay for treatment, has declined just as fast. That has frustrated efforts to shrink the persistently high losses and taxpayer subsidies that run about $65 million a year

In a report Tuesday to the Clark County Commission, the hospital said it lost $72 million during its fiscal year ended June 30, or 2.7 percent worse than last year’s loss, out of a total operating budget of $539.7 million. Where UMC once showed surpluses, it has been in the red for 10 straight years with a cumulative loss of $407.5 million, more than half of it since 2009.

“It simply cannot continue with these numbers,” County Commissioner Steve Sisolak said. “We’re not living in the economy any more where we can just write another check.”

Sisolak has advocated more aggressive collection of unpaid bills, but he acknowledges uninsured patients are a bigger problem.

“I don’t know how we will turn this around,” he said.

This year’s budget calls for a $71 million loss and a $59.2 million infusion from Clark County taxpayers to help close the gap.

“We have stabilized the loss, but we need to get it back into the neighborhood of $40 million to $50 million,” said Brian Brannman, who took over as chief executive officer on July 1.

The county next month will start installing an electronic health records system, Brannman said. Replacing paper records, aggressive efforts to recover money when claims are turned down and other efficiency measures should help trim losses, he said.

But UMC must change its patient mix. UMC has absorbed increasing numbers of low-income patients covered only by Medicaid, which has reduced payments in recent years.

According to the most recent annual statistics available, UMC absorbed $253.3 million in bad debt or charity care for stays of at least one night, more than double any other hospital in the county. At the same time, 27 percent of all inpatient bills last year were covered by Medicaid but only 19 percent from some form of private insurance. By contrast, Summerlin Hospital Medical Center, often the most profitable in Las Vegas, ran 8 percent Medicaid and 41 percent private insurance.

In addition to increased competition, the sinking economy has left growing numbers of people without insurance. Seven of the 12 other hospitals in Clark County had operating losses last year.

UMC must get past its image as a last-resort for those who can’t afford anyplace else, Brannman said.

“We have spent several years in a survival mode,” Brannman said. “We have to differentiate ourselves with centers of excellence; we have to stand out to give people a reason to come to UMC.”

That means emphasizing specialties such as transplants, oncology, cardiac care and trauma care and the hospital’s relationship with the University of Nevada School of Medicine, he said.

Referring to UMC’s founding in 1931, Brannman said, “If we’re going to be around another 80 years, we have got to start acting in a way that will keep us viable.”

Contact reporter Tim O’Reiley at toreiley@reviewjournal.com or 702-387-5290.

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