Getting Back to Growth
Today I want to talk about the budget – the one just ended and the one for the year ahead.
Before I do that, I want to take a moment to recognize the many of you who helped us with the activities around the dedication and opening of the School of Medicine last week. Applying the finishing touches to the building, spiffing everything up, and pulling off a series of large events took a huge amount of work. My thanks go out in particular to our construction team, physical facilities, environmental services, food services and our medical school staff. Finally, a special thanks to the many students from all our schools who assisted our visitors. You always represent us so well.
As I have said before in this space, I was not sorry to turn the page on Fiscal Year 2017, especially the last four months. We were confronted with mid-year cuts in state appropriations of $9.2 million and an unexpected reduction in our “Disproportionate Share” payments for uninsured patients of $24.5 million. This nearly $34 million reduction in funding would be challenging under any circumstances but to be faced with it at mid-year was especially difficult.
In response, we set a very aggressive target of saving $24 million in the last four months of the fiscal year, hoping to end the year with a $10 million loss. Your efforts resulted in the savings of $24 million as targeted. Late notice of a payment due to the tort claims reserve fund of $1.5 million bumped up our year end loss to $11.5 million. Even so, I am deeply appreciative of the hard work and sacrifice it took to reach our target savings.
This outcome would not have been possible without the many efforts to find costs savings and/or additional sources of revenue. Many people across the organization contributed but I especially want to extend my appreciation to Chief Financial Officer Bruce Fairbanks, Associate CFO for Budget Debbie Saxon, Health System CFO Brad Sinclair and all the members of our finance and budget teams. While most of the time, the answers they gave us were not those we wanted to hear, these teams worked long hours for months on end to help us find our way through this fiscal maze.
I would like to say that we can now take a deep breath and go back to business as usual. But we are faced with another lean financial year. Our FY18 budget is a “break even” budget. We have been very conservative in constructing it, anticipating that some of the reductions we experienced last year will remain in place. We have included a number of initiatives that will produce additional revenue, but we’ve been conservative in our expectations.
After last year, a “flat” budget is a welcome sight and it took some doing to get there. While this is the target for FY18, we will be doing all we can to beat that target to enhance our ability to invest in strategic priorities and continue to grow. We need that additional revenue to reinvest in our people, programs and infrastructure to tackle the large problems we face in helping Mississippi become healthier.
We know that whatever ends up happening with health care policy in Washington, D.C., will impact us – in terms of academic medicine, health care financing, education and research funding. While we need to be attentive to those developments, our continued success depends more than ever on our ability to prove our worth.
How do we go about proving our worth?
Above all, we must continue our march to improve clinical quality. We’ve made steady progress under the leadership of Dr. Michael Henderson, chief medical officer. In many categories, we are tracking at or better than the national average. This would not have happened without everyone stepping up their game.
Quality matters because it’s the right thing to do for our patients, it’s the right way to teach our many learners, it greatly impacts our public image and it factors into our reimbursement. That’s why clinical quality improvement continues to be our top strategic priority.
Other evidence of our value: We have just opened a magnificent School of Medicine education building and have plans for a ribbon cutting for our much-needed Translational Research Building in November. We will begin construction on a Clinical Trials Unit in the University Hospital in 2018. Growing our education programs (while maintaining high quality) to meet our state’s workforce challenges is an important showing of our worth to the citizens of Mississippi. Just as important is the growth of and investment in our research programs focused on those diseases most detrimental to our state.
In this new reality, all investments must be carefully measured and vetted. We must be a new kind of smart in this "new normal" world. We have dozens and dozens of initiatives in place to improve revenue, increase patient volumes, and become more efficient in everything we do. We are exploring opportunities for partnerships with other organizations where that makes sense. We are aggressively seeking new sources of revenue.
Success comes by keeping our eye on the end goal, attending to the important work at hand, and being able to continue to grow strategically in the face of the changing financial and payment landscape. The last few years, indeed our long history, have proven we can be successful in these efforts. With your talent and continued commitment, I know we will get there, as we continue our journey toward A Healthier Mississippi.