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UIHC faces big cuts

BY EMILY BUSSE | NOVEMBER 04, 2009 7:20 AM

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The UI Hospitals and Clinics has its own share of cost-cutting to tackle after statewide cuts last month resulted in a 5 percent reduction in Medicaid reimbursement — roughly $5.7 million lost in patient-care revenue.

With this recent loss, plus an $11 million cut announced this past June, UIHC officials must now cut a total of $17 million to $18 million by the end of June 2010, according to an e-mail sent out on behalf of UIHC officials Tuesday.

Reductions to retirement benefits for employees from 10 to 8 percent — a plan approved by the state Board of Regents last week — will help offset up to $4 million of that deficit.

Gov. Chet Culver’s across-the-board cuts cost the UIHC several million in Medicaid dollars — the same cuts that cost the UI $24.7 million from the general education fund. The UIHC was not affected by the reduction in the general education fund, however.

“This is essentially a separate budget issue [from the UI’s],” UI spokesman Tom Moore said.

One of the unique challenges for the UIHC is a lack of federal dollars.

“The university received federal stimulus dollars to help cover expenses for one year,” UI Provost Wallace Loh said in an e-mail. “The UIHC is not eligible for stimulus dollars, because the American Recovery & Reinvestment Act is only for educational institutions, so they have to make cuts immediately.”

UIHC officials have been working to trim funds since the original cut was announced in June, said the hospital’s Associate Vice President for Finance Ken Fisher.

At that time, UIHC officials announced plans such as furloughs and layoffs as part of their strategy to meet the budget reductions and reach their goal of a 1 percent operating margin for 2010, Fisher said.

“That original plan was adopted for our budget by the Board of Regents,” Fisher said. “We’re still working on trying to get all those features implemented.”

Fisher said any furloughs or layoffs wouldn’t be greater than the original numbers approved by the regents because the lost Medicaid reimbursement “is about equal” to the amount saved from retirement benefit reductions.

But that “is not enough,” according to the e-mail from the UIHC officials.

No decisions have been made as to how the reductions will be achieved, Moore said.

“No options are off the table, and we’ll have to look at which options might work looking at the circumstances,” Moore said. “No final decisions have been reached about which options are a part of the plan or the extent of them.”

UIHC officials will aim to avoid any cuts that could result in a lower standard of care, Moore said.

“Our top priority is to maintain the high quality patient care,” he said. “Any cuts that are being considered will not affect patients.”

And the hospital has kept that priority in mind as they’ve worked to meet the budget target by doing “anything from reducing travel budgets to trying to find energy savings” before making any cuts that would directly affect patients, Fisher said.

“[But] that’s increasingly harder and harder to do,” he said.

Some of their cost-cutting may have improved patient care, Fisher said, noting one area of money saving came from working to increase patient safety.

“It is a whole myriad things we work on to manage our costs as low as we can,” Fisher said. “To make sure our organization takes care of patients very, very well.”


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