Friday, March 10, 2017

Budget Update

Published in VC's Notes on March 10, 2017

Legislative and Financial Update

Good morning!

This VC Notes can be seen as a continuation of last week's column as I try to keep you updated on our budget challenges and related developments.

I'll start with good news. 

On Wednesday House Bill 926 - known as the Health Care Collaboration Act - passed the Mississippi Senate by a vote of 36 to 8. The bill, which I also wrote about last week, will give us the ability to participate in joint ventures with other health care providers in Mississippi.  It also will grant us an exemption from the state procurement laws for purchases to be used in our clinical mission.

This is not a “done deal” yet, but at this point I am feeling more confident.  It can be extremely difficult to get even the simplest bill through the Legislature, but our bill sponsors in the House and Senate and our government relations team have done a fabulous job to get us to this point.  Fingers crossed.

There is also good news on the subject of our current budget difficulties.  The state Medicaid director, Dr. David Dzielak, has approved our appeal of one part of the methodology that determines hospital Disproportionate Share (DSH) payments.  So instead of a $35 million DSH reduction from what we had anticipated at the start of the year, we are now at $24.5 million, with a $2 million appeal still under consideration.  

Although the news about DSH is certainly welcome, we are still looking at a sizable year-end deficit - even if we factor in this latest change in DSH funding, reach our $24 million savings target, and realize $12 million from revenue cycle improvements and other ongoing finance projects.

We announced yesterday that we are closing two University Wellness Center locations in an attempt to cut costs.  The downtown and northeast Jackson centers will close at the end of business March 31.  University Wellness Center locations in Flowood, Madison and Brandon are not impacted by this decision and will stay open.

A combined 36 staff members will remain on the job through March and can apply for openings at the other three centers.  These employees work for Power Wellness, the company that manages the centers for UMMC, but I see them as part of our extended family. 

I regret the impact that closing these locations will have on these employees and center members, but our financial situation has left us with few choices.  With these closures, however, we will be able to concentrate our resources to create high-quality, medically integrated wellness centers at the three remaining locations.  

I will spend the remainder of my office time today reviewing all the plans that have been submitted for additional reductions and revenue enhancements.  Next week I'll share our overall plan in more detail.  In the meantime, I will keep in mind one of my favorite sayings that I shared with you a couple of years ago.  It's the advice that always helps me get through challenging times:  Proceed with courage.

If we proceed with courage, then I know we will get through this and any other challenge, on our journey to A Healthier Mississippi.     



Follow me on Twitter @LAWoodwardMD