Health Center Budget Getting Back on Track
With the help of the General Assembly in the form of a $12.5 million special appropriation, the Health Center finished Fiscal Year 2000 in the black.
To be exact, $300,000 in the black.
"A heartfelt 'Thank You' goes out to all employees, for without their hard work this improvement could not be realized," said Peter J. Deckers, dean of the School of Medicine.
"I am looking forward to the coming year," he added. "I believe our future to be both exciting and bright."
In a strong show of support for the Health Center, the General Assembly in May provided $20 million in supplemental funds out of the state's surplus to help the Health Center address operating needs caused by the volatile healthcare environment and to enable it to continue investing in its strategic plan and academic mission.
The Health Center, along with virtually every other academic medical center in the country, was caught in a financial snare caused by reduced managed care payments and by declining Medicare and Medicaid reimbursements.
Of the extra appropriation, $12.5 million was designated for deficit reduction in FY 1999/2000; $4.4 million for FY 2000/2001 deficit reduction; and $3.1 million for research initiatives under the strategic plan.
A deficit originally projected at $20 million for Fiscal Year 1999/2000 was reduced to $12.2 million, through a combination of cost reduction and revenue enhancement activities. Expense reductions included layoffs and the elimination of vacant positions. The Health Center's financial restructuring also incorporates improvements in business practices, market share, and continued increases in new revenues through grants and private fund raising.
The Health Center's chief financial officer, Daniel Upton, reported that the last two months demonstrated performance improvements, including re-structuring costs in the fourth quarter, that produced revenues exceeding expenses. After applying the General Assembly's deficit appropriation of $12.5 million to the year-to-date deficit, there remained a modest gain of $300,000.
"I'm pleased with where we ended up - in the black," said Upton. "Considering the daunting challenges we faced at the beginning of the fiscal year, the ending was on a positive note. These results show that we are responsible stewards of the state's investment in us."
There was more good news in the end-of-year statistics:
The state's cash eases the problem, but it's not solved yet.
"While the last few months have been more positive, we must remain vigilant to the idea of continuing to find areas of increased revenue or efficiency," Deckers said. "We must all be aware that there will be financial challenges in the new fiscal year and for years to come.
"Expense management, revenue enhancement, performance improvement and customer service are always part of our daily jobs, he added. "I am confident and with good management and practices, teamwork and continued fiscal discipline, we will overcome the obstacles."
At the time the supplemental appropriation was made, a separate piece of legislation established a review committee to look at a number of financial, operational and programmatic issues at the Health Center. The review committee consists of 12 legislators, including the co-chairs and ranking members of the appropriations, public health and education committees or their designees.
Although some people have expressed concerns about the committee's oversight role, Upton said the review committee offers some advantages.
"It's important to realize that the legislative oversight does not represent a negative for the University," he said. "In fact, it may well represent an opportunity to better engage the legislature and to demonstrate to them that their investment is worthwhile because of the many roles the University plays, not just in higher education but in health care delivery, research and economic development for the entire state of Connecticut."