For the past six months -- if not longer -- the University of Arkansas for Medical Sciences has been looking for a solution to its fiscal woes.
In January, UAMS brass hosted University of Arkansas System trustees for an on-campus tour of three graying buildings, including the Central Building, which needs to be fire- and code-compliant by 2021. Leaders wanted to update all three properties, but just bringing the 60-year-old Central Building up to standards, with no upgrades, has a $13 million price tag.
At the time, leaders estimated the academic medical center would have $35 million less in net assets for the fiscal year starting July 1. The outlook looked more grim before the governor's Medicaid-expansion plan, Arkansas Works, passed.
By March, UAMS Chancellor Dan Rahn had proposed another round of options to the system's board: building a new power plant to save energy, adding bed space to accommodate more patients and increase revenue, reducing lease payments for administrative divisions off campus and getting a new on-campus building to house those divisions. UAMS estimated that all those projects would cost $87 million.
And now, the only surviving plans are to make the Central Building fire- and code-compliant and to expand the number of beds -- at a cost of $14.5 million.
The projects are moving forward in line with UAMS' fiscal limitations, said Cliff Gibson, a UA trustee from Monticello. UAMS will not upgrade the Barton Research Building or the Shorey Building, Rahn said.
"We will not be building a new power plant. We will not be relocating administrative staff and faculty," he said. "We don't have the resources to do that. So the deferred-maintenance problem does continue to grow."
At first glance, UAMS looked to have escaped the legislative session unscathed, getting the same $106 million appropriation it was given the previous year. But -- unlike the past couple of years -- the academic medical center did not get a reprieve from the state in administrative fees it pays to the Department of Human Services and this year will shoulder the entire $9 million cost.
It will do so as the majority of its state appropriations -- or some $85 million -- go toward matching programs. That had left UAMS with $21 million to support its academic side.
It's that arrangement that is at the heart of many of the academic medical center's financial woes, Rahn said.
UAMS has been using patient-care revenue to bolster its academic side, which does not get state funding. While income from patient care has increased in large part because of the state's private Medicaid option, UAMS leaders say it's still not enough.
In the next fiscal year, UAMS leaders also are hoping that revenue stream -- instead of its reserves -- will cover the entire cost of bringing the Central Building up to code and renovating a wing to add 28 beds. They said they think it's possible because they have until Aug. 1, 2021, to attend to the code standards.
To do that, UAMS would need to upgrade four mechanisms, including elevator controls and fire sprinkler systems, on floors three through eight.
Those floors have been used for business operations since 2009, when UAMS moved patient-care operations to a new hospital tower. Because of that switch, the state fire marshal required that the repurposed building meet minimum requirements of the Arkansas Fire Prevention Code.
Currently, those floors house some 785 employees.
Of those, about 70 training staff members for the Clinical Decision Unit are housed in the A-wing, which UAMS is reclaiming for patient care, said Dr. Roxane Townsend, UAMS' chief executive officer, adding that leaders don't know where to relocate the staff temporarily.
UAMS will use floors four and five to add the 28 beds, some of which will abut the labor and delivery area and can be used for patients who have delivered babies by cesarean section.
The academic medical center has 450 beds and runs on average more than 95 percent occupied. The industry standard is to be at about 85 percent occupancy, Townsend said.
If a patient shows up to the emergency room and there isn't an inpatient bed available, Townsend said employees will treat the patient in the emergency room until a bed becomes available. There are also other areas of the hospital that can manage critical care, such as the post-anesthesia unit, she said.
UAMS averages about six to 10 patients daily at outlying hospitals who want to transfer there, Rahn said.
"We're running at an absolute maximum," he said. "We're also working on efficiencies and capacities on outpatient care, making sure we get testing and diagnostic things done as quickly as possible."
Consultants have said the need for inpatient beds is going to decrease, Townsend said. But she was unsure of whether that might happen for the academic medical center because UAMS gets "complicated cases" as a teaching hospital.
The Emergency Department was built so that UAMS could eventually add a south tower for more clinical space, she said. But it's not an expense to take on right now, she said.
Leaders are trying to balance UAMS' three-pronged mission: to educate current and future health professionals and the public; to provide high-quality, innovative, patient- and family-centered health care, along with specialty expertise; and to further knowledge in areas of human health and disease and bring discoveries into health care improvements, Rahn said.
"In an ideal world, we would like to be able to build a new tower to expand patient care," he said. "But which do we do? Those are the things that we wrestle with. We're not just a health system, and we're not just a university."
For the new fiscal year, the academic medical center has prioritized other items, too: reserving $7 million in contingency funds, budgeting $10 million for salary adjustments, and preparing for an increase in its share of health insurance premiums.
The human-resources department will help UAMS leaders determine where the largest pay disparities are in the market and make those positions' salaries more in line with competitors.
The university stashed away $4.5 million for UAMS' deferred maintenance and bumped up tuition for the College of Medicine by 10 percent, believing that the increase still will leave it in the lowest quarter in tuition costs of all public medical schools across the nation.
And they will continue to explain UAMS' financial situation to legislators and seek funds for its educational mission.
"The pressure comes from the failure -- at least thus far -- of the state to provide competitive funding," Gibson, the trustee, said. "We've been attempting to get that message out. At the end of the day, it's the decision of the governor and Legislature as to whether or not they will receive that message favorably and for the interest of the people of Arkansas."
Gov. Asa Hutchinson is focusing on the budget at hand and will review UAMS and other agencies' appropriations for the next budget, his spokesman, J.R. Davis, said.
Meanwhile, similar facilities in other states get much more support from their lawmakers. For example, the University of Mississippi Medical Center received about $185.5 million from the state in fiscal 2014, and the Medical University of South Carolina received $110.8 million that same year.
"The way we do things here in Arkansas is significantly different than surrounding states' medical centers and teaching facilities as well," said Dr. Stephen Broughton, a UA System trustee from Pine Bluff. "And our funding is way different, and we are suffering here in Arkansas the way we're doing this. We need to assist them and find another way that funding is at least comparable to surrounding states."
Gibson, who is chairman of the UA System board's Joint Hospital Committee, said something is out of sync.
"When we're only putting in a tenth of what Ole Miss is, there's something wrong with the picture," he said.
Funding the educational mission of UAMS is probably what needs to happen, said Sen. Larry Teague, a Nashville Democrat who co-chairs the legislative Joint Budget Committee.
"The other higher-ed institutions haven't gotten any new money in at least three, four, five years," he said. Allocating funds for medical education at UAMS "wouldn't be any more consistent, in my opinion."
Teague said he knows the Legislature has to address the problem eventually, he just doesn't know when.
"It's just finding the money," he said. "There's a lot of dynamics going on. The last couple of weeks when you get to Revenue Stabilization Act, and your money is already tight, it's pretty hard to take from somebody else and give to them. There are a lot of areas that have needs."
Teague said he sees UAMS in the same way he did the highway-funding bill: "How long are you going to let the roads go before you really have to fix them, where overlay doesn't work anymore?"
"You just have to hope you fix it before then," he said.
Metro on 06/12/2016