April move set on link of UAMS, St. Vincent

Wednesday, March 20, 2013

MORRILTON - University of Arkansas trustees said Tuesday that they recognize the potential financial and operational benefits of a proposed alliance between the University of Arkansas for Medical Sciences and St. Vincent Health System but want more information about how such a partnership would be governed before they provide approval.

The board of trustees, which oversees UAMS operations, plans to make a “go or no-go” decision in April about the formation of a “jointly owned and governed network” that would allow the state’s only medical school to share equipment, staff members, contracts, and cardiac and cancer treatment lines with the private hospital system, which is operated by Colorado-based Catholic Health Initiatives.

“We need to be a little further down the road before we can evaluate if this is a good move or not, but what I’ve heard in the last two days is a real crisis,” said Trustee John Goodson of Texarkana, chairman of the UA board of trustees’ Joint Hospital Committee.

In mentioning the “crisis,” Goodson was referring to information about changes to health care and health finance presented by state and national health leaders at a two-day board retreat at the Winthrop Rockefeller Institute in Morrilton that ended Tuesday.

The UAMS chancellor, Dr. Dan Rahn, told trustees that UAMS wants to use the proposed partnership to save at least $25 million annually as part of $105 million in combined savings and revenue increases it needs to achieve within the next three years to break even in the face of cuts in federal research funding, potential declines in state appropriations and changing patient payment models.

The hospital part of UAMS finished fiscal 2012, which ended June 30, essentially breaking even, with expenses exceeding its $563 million budget by $569,000, a spokesman said. UAMS as a whole, including academic programs, research and outreach components, has a $1.3 billion annual budget.

In the past, academic health centers have subsidized research and academic programs with excess clinical revenue, which isn’t possible anymore, Rahn said Tuesday at the retreat.

“There’s a societal goal to get [health-care costs] to flatten,” he said. “We can’t address the current issues by envisioning growth. We have to reduce expenditures.”

Consultants from the Deloitte firm said in a report, which assumed a “very high degree of integration that may or may not represent what the parties intend,” that UAMS and St. Vincent could save a combined $38 million to $63 million annually through a partnership. UAMS has already rejected some of the consultants’ proposals, such as abandoning its $87 million investment in its Epic computer system so that it can use St. Vincent’s system, Rahn said. And leaders are “pushing back on some of the numbers” presented in the commissioned report to determine whether cost estimates are correct, he said.

If the UA board approves the alliance in April, that decision would include the early outlines of a “governance structure” that would dictate how the hospitals would handle finances and decision-making authority, Rahn said. Attorneys from both hospitals are working to address concerns about how such a structure would address UAMS’ obligations under state finance and open-records laws, he said.

A governance structure and a more specific partnership design will answer other questions about how the two hospitals would share employees with differing pay structures, insurance plans and employment policies, hospital leaders have said.

Northwest Arkansas, Pages 9 on 03/20/2013