It’s a step in the right direction, but by no means a final solution.
That was the message from University of Missouri Health Care officials Monday as they announced an $8 million profit in the fiscal year that ended June 30. The surplus is the health care system’s first in four years, and it comes after suffering more than $30 million in losses between June 1999 and June 2002.
The announcement of MU Health Care’s profitability comes as The Hunter Group, a Florida-based management firm known for its ability to turn around academic hospitals, winds up its first year in charge of the system. Much of the system’s return to black can be traced to better bill collection practices and more effective managed-care contracts since The Hunter Group took over last September, said David Coats, MU Health Care’s executive director.
“It was absolute dedication to efficiency across the board,” Coats said.
Turning Things Around
One of MU Health Care’s biggest problems during the down years was its lack of ability to turn patients’ bills into cash, Coats said. When customers are billed, that money is immediately recorded as revenue that is adjusted every month to count only those bills that have been paid. Since The Hunter Group took over operations of the system, MU Health Care has reduced the time it takes to turn bills into cash to 58 days, versus the industry average of 70 days.
Hard Road to Travel
Still, the previous losses suffered by the system have taken their toll. There are 60 vacant staff positions, including many in the profitable internal medicine and surgery departments. There is also $30 million worth of capital improvements — mostly medical equipment purchases — that need to be made.
“We still have a long way to go to get to what I would describe as financial health,” said Hank Wells, MU Health Care’s chief financial officer.
One potential obstacle to complete fiscal recovery may be a decrease in admissions. In fiscal 2004, which began July 1, University Hospital is running about 400 patients behind last year’s in-patient admissions. Despite this, Hunter Group officials predict a profit of $15.6 million for the system in fiscal year 2004.
Coats said he does not expect MU Health Care to lay off any more employees. More than 60 employees were let go June 16, but Coats said better monitoring of staffing needs by The Hunter Group has negated the need for another round of layoffs.
MU Health Care is paying The Hunter Group $94,000 a month to turn around its financial situation. Now that the “the heavy lifting” is finished, Coats is expected to leave in January, with Wells not far behind. A committee to replace the two men, made up of administrators working directly for the UM system, will hold its first meeting next week.
MU Health Care had lost $23.8 million in 2000, $8.8 million in 2001 and $5.5 million in 2002. Monday’s news excited Coats — to a point.
“On the one hand, we would like to shout from the rooftops about the gains,” Coats said. “But on the other hand, we need to be cautious about how far we still have to go.”