Some patients without insurance would no longer receive noncritical care through the University of Arkansas for Medical Sciences under a plan outlined Thursday by UAMS leaders to reduce a projected $50 million deficit for the coming fiscal year.
The plan would still leave UAMS $7 million in the red for the 12-month period beginning July 1. And, even its planned deficit reduction relies on projections and funding decisions not yet made by the state.
The decreasing value of assets is a large part of UAMS’ financial woes, UAMS Chancellor Dan Rahn told the UA System board of trustees at a meeting in Fort Smith.
He offered an update in a financial report deliveredin January to the board, presenting a crystal-ball view of finances for an organization with expected revenue of more than $1.1 billion in fiscal 2015.
Rahn noted that the $79.4 million state appropriations for UAMS’ “core operating” costs turned out to be $7 million below what UAMS leaders had projected in January.
He said he will request $7 million in “rainy day” funds from the state for fiscal 2015. Also, he said he will request a reduction in what UAMS pays in administrative fees to the state that go to support rural hospitals and in fees tied to a settlement in the landmark Olmstead legal case involving adults institutionalized in nursing care. The requested fee reductions would total $9.5 million.
“It would create a hole in the Department of Human Services budget,” Rahn said. But he noted that UAMS received a $7 million reduction in the fees it pays in each of the past two years. He said he would ask that the reduction recur every year.
He also presented a goal to reduce to 4 percent the amount of elective care going to uninsured patients.
“We believe we should restrict our care for those who have elective medical” procedures but “who have elected to not be insured,” Rahn told the board. Elective procedures might include a colonoscopy screening or a knee replacement.
In an interview after the presentation, Roxane Townsend, director of UAMS Medical Center and vice chancellor for clinical programs, said a written policy was being developed on the elective-care issue.
Rahn praised the state Legislature for voting this month to continue the “private option,” using federal Medicaid dollars to support insurance programs for the poor.
But he acknowledged that the number of people signing up for coverage is less than UAMS leaders had projected.
No longer does Rahn expect 75 percent of uninsured people who are eligible for new insurance options to sign up for them. He told the board that he now expects 40 percent to get insurance.
With more paying customers, that would mean $14.2 million in additional UAMS revenue for fiscal 2015, though it would be far below the projected $27.9 million uptick based on the 75 percent projection, according to Rahn’s presentation.
Insurance efforts have already been noticed at UAMS. In February, about 1,800 patients were seen who had been uninsured in the past but had insurance that month, he said.
“The expansion of insurance is working,” Rahn said.
However, Rick Smith, dean for the college of medicine, said a national study found that, overall, the U.S. Patient Protection and Affordable Care Act will hurt medical schools financially by reducing federal payments.
“We’re not at the end of this. We’re at the beginning of what is going to be a very disruptive time,” Smith said.
UAMS, the state’s largest public employer with about 10,000 workers, also anticipates a $4 million reduction in personnel expense. In an interview, Rahn said UAMS is “not anticipating” large layoffs, but some positions will go unfilled in some cases. He added that with reorganization efforts, “some jobs will change.”
Northwest Arkansas, Pages 9 on 03/21/2014