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UAMS announces plans to cut 51 jobs, confirms $30M operating loss

by Daniel McFadin, Ryan Anderson | August 9, 2023 at 11:05 p.m.
The University of Arkansas for Medical Sciences' Little Rock campus is shown in this file photo.

The University of Arkansas for Medical Sciences confirmed Wednesday that it had an operating loss of $30 million for its 2023 fiscal year, from July 1, 2022, until May 31, 2023, and that it was laying off 51 positions effective Sept. 7.

The news of the shortfall for the fiscal year, which ended June 30, was originally announced July 10 via an internal email and a video that was a conversation between UAMS Chancellor Cam Patterson and Amanda George, UAMS' vice chancellor for finance and chief financial officer.

“This year, we have had an operating loss unfortunately; we’re about $50 million below where we want it to be,” George says in the video. “We have had some investment income that has helped offset that. So we are currently through May at a loss of about $30 million, which is again, not where we need to be. But there are reasons why we’re there.”

[Video not showing up? Watch here:]

George cited “escalating labor costs, escalating supply cost inflation, covid” as leading to “the financial situation.” However, she added, the hospital did have a “success story” — “we’ve done a great job hitting our revenue budget this year.”

Earlier this month, UAMS received $30 million from the state’s Budget Stabilization Trust Fund. That money is “more of an advance than a loan,” Patterson told the University of Arkansas System board of trustees Wednesday during their annual retreat at the Winthrop Rockefeller Center in Morrillton.

UAMS will pay the $30 million back over 10 months, beginning in September. Repayment by the end of the fiscal year — in this case, June 30, 2024 — is standard for loans from the Budget Stabilization Trust Fund, George said. The state will hold back $3 million of the medical center’s appropriations each month as repayment.

UAMS expects to receive another $30 million in January as part of a recent settlement with the Centers for Medicare & Medicaid Services, which had been underpaying hospitals for a certain prescription drug program, George said. UAMS has also worked to reduce expenses, including “a hard hiring freeze” that is currently planned to be in effect until October 1, George added.

The chief financial officer said UAMS had been in a hiring “frost” for months, but the freeze halts hiring in all but a few essential areas, such as nursing. George said UAMS is not exempt from a state and national nursing shortage.

In addition, fewer nurses means fewer available beds for patients, which Patterson noted reduces UAMS revenue as well as care capacity for Arkansans.

Andrea Peel, the UAMS associate vice chancellor of communication, said the 51 confirmed layoffs will affect support services, administration and service lines.

“UAMS is not immune to the current effects of inflation that has been hitting us for a while and others, too,” Peel said. “As the obligation that we have to the state of Arkansas as its only academic medical center, we have to continue to look at ways to remain efficient, and that can mean reorganizing some areas without affecting our essential programs, and continuity of care and services. And so that’s what we continue to do. In some cases, that could mean job duties that are previously assigned to one position may now be picked up by another employee. And it also means that we’re we aren’t filling some open positions where possible.”

Peel also confirmed that 183 open positions will not be filled. UAMS currently has more than 11,000 employees.

In the internal email and video, George said that the Resource Optimization Committee at UAMS had done a “really great job of identifying opportunities and that have realized close to $80 million and financial opportunities that have improved our finances.”

George said the UAMS pharmacy department “has been a standout in terms of multiple projects that they have ongoing to reduce costs and also enhance revenue. And then revenue cycle initiatives have also been successful.”

She added that among the “big successes for the current fiscal year” was a reduction of contract labor by 70%. UAMS had achieved several other financial goals, but “we didn’t see year over year improvement” due to wage and supply inflation, George said.

According to UAMS’ “Team Transformation” page on its internal website, the hospital has engaged a consulting firm called Huron, which describes itself on its website as “a global professional services firm that collaborates with clients to put possible into practice by creating sound strategies, optimizing operations, accelerating digital transformation, and empowering businesses and their people to own their future.”

According to a source, Patterson conducted a town hall meeting with employees on July 18. During that meeting Patterson answered a question about the hospital’s finances and what recommendations Huron had made regarding cost savings.

“So we can’t continue on the glide path that we are currently on financially and feel confident that we can do the bare minimum, which is meeting payroll each month — but more importantly, reach our Vision 2029 goal to have everyone at market-competitive salaries across the organization,” Patterson said. “And I realize, and you all know, that we’re not there yet in many, many areas. So, the engagement with Huron is an important part of helping us to identify cost savings.”

Since the covid-19 pandemic reached the United States in 2020, “most every hospital in the state” has faced similar problems, according to Bo Ryell, president and CEO of the Arkansas Hospital Association.

“All revenues have remained relatively flat,” Ryell said. “So they’re all facing those losses, and it’s a significant issue for Arkansas hospitals going forward. They’ve done a great job of reducing expenses, but inflation and a lack of revenue increases from Medicare, Medicaid or commercial insurance has created these losses.”

As for contract labor in the wake of covid surges, Ryell said “every hospital worked towards reducing [it] through travel nurses and travel health care personnel. That was a great way to reduce those expenses and that’s been a focus of every hospital is to reduce those as much as possible.”

Ryell said the association has worked to increase Medicaid's payments to hospitals, which he said haven't been increased “in a very long time.”

In addition, more than 82,000 Arkansans lost their Medicaid coverage in July. That included 39,967 Arkansans whose coverage had been extended previously because of special eligibility rules during the federal covid-19 public health emergency, and 42,312 others whose coverage was discontinued as part of normal operations, according to the Arkansas Department of Human Services.

The figures reflect the fourth month of Medicaid eligibility redeterminations after the end of the continuous coverage requirement that was in effect during the public health emergency.

Ryell said the American Hospital Association has also worked to implement increases in Medicare payments nationwide.

“But individually, you’ve seen negotiations between hospital and commercial insurers, such as United, to try to bring revenue back up to market levels in comparison with other hospitals or other states,” Ryell said.

Information for this article was contributed by Tony Holt of the Arkansas Democrat-Gazette.

This story has been updated. It was originally published at 12:33 p.m. under the headline "Facing $30 million shortfall, UAMS announces it will cut 51 jobs."


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