UMC may break even this year, official says

Dan Kulin

Wednesday, July 2, 2003 | 11:13 a.m.

After about seven months in which Clark County pumped almost $40 million into the financially floundering University Medical Center, the top hospital administrator said Tuesday that if current trends continue, the hospital will break even by the end of the year.

But officials cautioned that while the end of the county's operational subsidy appears in sight, unexpected events could easily change that optimistic outlook.

UMC interim Chief Executive Officer Michael Walsh said much of the financial turnaround is due to layoffs and the cutting of vacant positions done in February, which will save UMC $10.2 million a year.

Other cost-cutting measures done since last fall included closing two Quick Care centers; renegotiating contracts with vendors to reduce the costs; closer attention to case management to reduce unnecessarily long hospital stays; and efforts to obtain reimbursement for all hospital visits by those who qualify under county indigent care programs, Walsh and County Manager Thom Reilly said.

UMC was also helped by higher reimbursements from Medicaid, which brought in $20.4 million in February and continues to provide about $1 million a month in revenue, Reilly said.

Ben Contine, spokesman for Las Vegans for Affordable Health Care, which opposed the cuts made earlier this year, said, "Hopefully with this good news, we'll start hearing where we can expand, and we'll have a dialogue on how to increase access.

"We had said all along that cutting health care programs is always shortsighted," he said.

But Reilly said there are no plans at this time to rehire any laid-off staff or to reverse any of the other changes that steadily improved the monthly bottom line at UMC.

"We're not out of the woods yet," Reilly said. "In May UMC was losing $1.4 million a month, and that's still a lot of money."

However, the $1.4 million operating deficit for May was the fourth straight month the operating deficit has declined, Walsh said.

"If we keep this trend going, all things being equal and barring a catastrophe, by the end of the calendar year we will break even," Walsh said. "Six months ago this was only a dream."

Reilly said he's hoping the operational deficit will be under $1 million for June and agreed the trends show UMC could be breaking even by the end of the year.

"But it's still early on and I'm being cautious. It's a volatile situation," Reilly said.

Reilly said the underlying reason for UMC's financial troubles still need to be addressed.

"There's 250,000 people who are uninsured that we still need to account for," Reilly said.

Walsh said ideally UMC should be a financially self-sustaining operation, and it managed to remain that way in recent years until the Sept. 11, 2001, terrorist attacks sent the economy into a tailspin, increasing the numbers of uninsured and poor patients going to the hospital.

Commissioner Bruce Woodbury said UMC has needed extra financial help from the county two or three times during his 22 years on the commission.

"It happens from time to time because it is a hospital of last resort for the indigent and those who cannot pay," Woodbury said. "It was the result of the economic downturn and a lot of people being thrown out of work after 9-11."

But Woodbury said the trend is positive, and hopes are that the changes put in place during recent months will better protect UMC from the next economic downturn.

In November the county commissioners agreed to a $38.4 million subsidy for UMC, of which $20 million paid off UMC debts. Most of those debts were for medicine, officials said. The remaining $18.4 million from the county was used to offset the monthly operating deficits.

The commissioners also budgeted $15 million to subsidize UMC operations for the fiscal year that started Tuesday.

If UMC operations break even by the end of the year, much of that money would be available for other projects. Walsh and Reilly said they hope to use whatever money is not needed for a subsidy to purchase new billing software for the hospital.

The new software will cost $12 million to $15 million, and replace the labor-intensive software the hospital now uses, Walsh said.

"The $15 million for UMC for next year is for a worst-case scenario," Reilly said. "In a best-case scenario we will use the $15 million for a new computer system."

Contine disagreed. He suggested that once the hospital is financially solvent again "what we need to be looking at is: How do we increase the services? How do we go into areas that currently don't have access to the public health care system?"

Sun reporter

Will Oremus contributed to this story.