There's a 60-year-old building tucked away in the center of the University of Arkansas for Medical Sciences complex.
It's flanked by two other buildings that are almost as old. They aren't visible to drivers zipping by on Interstate 630, nor to those passing by on Markham Street in Little Rock. It's when visitors walk through the halls of the buildings and look -- inside and out -- that the age starts to show.
Air-conditioning units out the windows. Plywood covering some windows. Two-by-four wood blocks holding up pipes. Exposed pipes in the buildings.
And the buildings are just one item on a long list of UAMS' needs.
Dr. Dan Rahn, the chancellor of the academic medical center, has made clear what comes first.
"The No. 1 priority is to keep our programs operating," he said. "And No. 2 would be this issue of facilities, both maintaining our current facilities and the funds we need for new facilities, particularly the demands that are on us to meet patient care for referrals and things like that."
The money, though, isn't easy to come by.
Legislators see UAMS' value not only in caring for Arkansans but also in teaching future doctors and leading research, they said. But there's only a finite amount of money to go around, said Rep. Jeremy Gillam, R-Judsonia, the speaker of the Arkansas House.
UAMS has run a deficit for the last two fiscal years after the state slashed some of its appropriations. Even though UAMS has gotten more money from patient care revenue -- a result of the state's private Medicaid option, officials there say -- it's still not enough to cover everything, Rahn said. And that's after UAMS has brought some of its own expenditures onto the chopping block.
Last month, Rahn made his plea before the University of Arkansas System board of trustees for more state dollars.
"Keys to the candy store would be nice," trustee Cliff Gibson said in a later interview.
But that likelihood is slim.
PEAK OF FUNDING
Fiscal 2013 brought UAMS a peak in state funding at $114.6 million. Of the entire allotment, some $64.6 million was scheduled for matching programs, leaving UAMS with about $50 million, documents show.
The next fiscal year, lawmakers gave UAMS a "special bump" for its Myeloma Institute for Research and Therapy and for various projects, but they gave a slightly lower appropriation otherwise. That year, the academic medical center fell $14.5 million in the hole, UAMS officials said.
The outlook grew more grim in fiscal 2015, after state appropriations dropped off by $7.6 million and UAMS shelled out $85 million as a Medicaid match. That year, UAMS was left to operate its hospital, academic and research arms with $21.5 million, and it fell $26.1 million in the red, the documents show.
And now UAMS is expecting a $13 million shortfall this fiscal year and a deficit into the future, Rahn said.
They've turned inward, trying to slim down operations.
UAMS has partnered with Baptist Health, St. Bernards Healthcare, Washington Regional Medical System and Arkansas Blue Cross and Blue Shield to form a shared services organization. The entities will collectively share certain services -- such as information technology and call centers -- but maintain their own independence. The goal is to cut the rising operating costs, and UAMS is expecting to save 1 percent, or $10 million, in its first year.
"We've been operating at efficiency," Rahn said. "We've redesigned our clinical enterprise. We've changed our budgeting processes. We've had tight controls on personnel growth. We've had to get our arms around what the private option was really going to mean."
As UAMS' chief financial officer, Bill Bowes, likes to say, "I don't think there's any part of the university that isn't being touched by a change project."
The close eye has even whittled down use of supplies. It's saved more than $350,000 changing their use of copying and printing, Bowes said.
"We're not just going with our hand out," Rahn said. "And we're intending to do more internally than we're looking for in assistance, but we can't do it all. We just can't do it all."
NO STATE FUNDSFOR TEACHING
The crux of it is that unlike its peers, UAMS does not get state funding for the teaching side, forcing the academic medical center to use most of that money for a "dollar for dollar" Medicaid match and uncompensated care, officials there said.
There isn't exactly an apples-to-apples comparison, because some peer institutions have separate academic centers and hospitals, while integrated academic medical centers get separate state funds for the teaching side and the hospital side.
For example, the Medical University of South Carolina received $110.8 million in fiscal 2014, and the hospital, a separate entity, received another $18 million.
"The state funds we have available to support education are lower than anybody's from what we can tell," Rahn said. "And on some level, it's too low for what we do almost regardless."
In the last decade, though, UAMS started new programs and branched out its locations, like the College of Public Health and the Northwest Arkansas campus. Those were started with the expectation that UAMS would have more funding, Rahn said, and that hasn't happened.
Most of the new academic programs have higher tuition to help pay for themselves, but they're also padded by other sources of revenue like patient care, UAMS said. Earlier this year, a legislative panel allowed UAMS to hire a consulting firm for up to $50,000 to study the feasibility of adding a dental school.
"We're doing a feasibility study because it can only go forward if it is self-funded," Rahn said. "It will not happen unless it is self-funded through a combination of philanthropy, tuition and dedicated state support for that."
UAMS has tried to keep tuition affordable for its students in a state that has ranked low in the number of patient care physicians and primary care physicians per 100,000 residents.
The UAMS College of Medicine, for example, has a stated goal of keeping tuition at or just below the 25th percentile for all public medical schools in the country, said UAMS spokesman Leslie Taylor. For 2015-2016, annual tuition is $26,548, she said.
Looking ahead, UAMS said even if the academic medical center got $10 million more from the state and accrued $23 million in savings, it would still be $24 million in the hole. If officials were looking to make up that amount, they would have to double the cost of tuition, Rahn said.
The other option? Start shrinking, he said.
DEFERRED MAINTENANCE
And there's another piece to the puzzle: the buildings.
The Central Building has fallen out of code from floors three to eight, and UAMS has until Aug. 1, 2021, to bring them up to date, said Mark Kenneday, vice chancellor for campus operations.
To do that, UAMS would need to upgrade four things, including elevator controls and fire sprinkler systems. And that alone is expected to cost $13 million.
The floors have been used for business operations since 2009, when UAMS moved patient care operations to a new hospital bed tower. Because of that switch, the state fire marshal required that the building now meet minimum requirements of the Arkansas Fire Protection Code, Kenneday said.
The project could take six to eight years, with construction happening floor by floor, said UA System Trustee John Goodson, who leads the trustees' building and grounds committee. UAMS would have to take a piecemeal approach, because some 785 employees work there.
"It doesn't make much sense to spend $13 million to bring it to code and keep what we have," Goodson said. "You've got basically offices that were hospital rooms."
There are two other aging buildings: the Barton Building, built in 1960 as a research building, and the Shorey Building, built in 1957 and currently used for administrative and physician offices.
The academic medical center's deferred maintenance list grows each year, UAMS said.
HELP FROM GOVERNOR
Rahn has met with Gov. Asa Hutchinson on many occasions to talk about UAMS, including its finances.
"The measures UAMS has taken in terms of restructuring their own budget and creating internal savings has been very impressive and shows they are doing everything they can to make sure it's managed efficiently," Hutchinson said in a prepared statement. "We acknowledge there is a legitimate need there, but we just have to balance that with the other needs of the state and determine whether there's anything additional the state can do."
The chancellor understands the state has its own priorities: highways, Medicaid expansion, prisons. The state is also expecting $25.5 million less this fiscal year and $90.3 million less in fiscal 2017 after lawmakers reduced income tax rates for some 600,000 Arkansans and repealed certain capital gains tax cuts enacted in 2013.
Still, Rahn is asking the General Assembly for more state funds as legislators start budget hearings and on the eve of a special legislative session.
He's got UA System trustees behind him.
"I would hope that our concern could impress them," Goodson said of legislators.
In the past, UAMS has beefed up its funding through one-time money, said Senate President Pro Tempore Jonathan Dismang.
"UAMS rightly so would want an ongoing revenue stream," he said. "Our goal has been to try to create room for that."
What that will look like is still a mystery, he said.
Policymakers are waiting for Hutchinson to polish up the final details of his Arkansas Works Medicaid plan, which is set to be the focus of the special session. If it passes, it will positively impact the state's budget, Dismang said. If it doesn't, Dismang said, the governor has indicated he would have an alternative "significantly tighter" budget.
Gillam, the state House speaker, said the state still has resources.
"But between the pressures of transportation funding, Medicaid in general ... those are all things that are draining the general revenue pot of money at a fast rate," he said. "K through 12 education that increases every year. You've got that pressure coming from a lot of places.
"I think everybody sees the value of UAMS, I really do. I don't know any members of the House that think that that would be a waste of money. But it's a case that could be made for so many entities as well. The hurdle is prioritizing."
Gibson, the trustee who leads the Joint Hospital Committee, said it speaks volumes that Hall of Fame quarterback and sportscaster Terry Bradshaw chose UAMS to get treatment.
"We don't have a second-rate show here," he said. "We got a first-rate deal. If UAMS were as popular as the Razorbacks, it wouldn't be a problem. But it's not."
Raising tuition isn't feasible, Gibson rationalized. If UAMS raised it too much, the students would turn away, he said. A bond issue also isn't an option. UAMS isn't financially sound to take on that debt.
"We need a strategy," Rahn said. "The wheels aren't falling off. We're not going to fail to pay our bills. But it's time. It's time for a real focus on the future at UAMS and whether it's going to able to be the kind of engine that it's been. Or not."
Metro on 02/15/2016