August 21, 2017
Challenges on the road ahead
In recent years, University of Iowa Health Care has experienced strong financial performance which has benefited all aspects of our tripartite mission. With the hard work and dedication of our talented faculty and staff we have been growing.
To produce positive margins, we have been able to grow our volumes at a rate that exceeded the rise in our expenses. Since 2008, our inpatient volumes have grown by 31 percent and outpatient volume by 33 percent; we met and even exceeded our operating margin goals, achieving a 6.9 percent margin in Fiscal Year 2016—a year of significant growth. We have become a market leader across the state for inpatient care.
However, national and state economic forces have already begun affecting UI Health Care with state budget cuts; significant changes in Medicaid and Medicare being discussed; and expenses like pharmaceuticals growing at a greater rate than revenue. So while we cared for a record number of patients in FY 2017, we did not meet our budgeted goal of a 3.5 percent margin, landing instead just below 2.0 percent.
These challenges are expected to continue in FY 2018, with additional reductions expected in Medicaid and Medicare reimbursements; a growing number of patients covered by Medicaid, Medicare, or no insurance at all; and many other factors.
With the help of all UI Health Care employees, we can meet many of these financial challenges by continuing to grow services and identifying new sources of revenue, but we must also reduce expenses. Fortunately, our 2017-2020 Integrated Strategic Plan outlines several new initiatives and provides opportunities for becoming more efficient and reducing costs. We are also exploring different potential scenarios in order to continue to support our multiple missions of education, research and clinical care.
UI Health Care leaders will be providing more information on our challenges and plans for our Fiscal Year 2018 budget at a live forum at noon, Tuesday, Sept. 5, in the East Room of UI Hospitals and Clinics (Elevator F/Level 8). I hope you will participate to learn more about what you can do to support these efforts. For those who cannot attend in person, the session will be video streamed, and also posted after the event on The Loop.
As always, I thank each and every one of you for all you do for our patients, our students and all those we serve.