Michigan Medicine reports positive FY ’23 finances


Michigan Medicine projected positive fiscal year-end results, with an anticipated 0.7% – or $39.8 million – operating margin on forecasted operating revenues of $5.9 billion. 

The results include fiscal year 2023 performance from University of Michigan Health, the organization’s clinical branch that includes five hospitals, 125 clinics and the U-M Medical Group, as well as U-M Health-West.

These results do not include the impact of the partnership with Sparrow Health System, which was finalized April 1.

David C. Miller, president of U-M Health and executive vice dean for clinical affairs, discussed the current operating environment and the FY ’24 plan during the June 15 Board of Regents meeting. 

“We focused during fiscal year 2023 on our commitment to our patients, families and community through innovation, health equity and improved experience,” Miller said. 

“We did not hit our targeted operating margin for fiscal year 2023. But despite significant expense pressures related to labor shortages, and revenue increases not keeping pace with inflation, we’ve continued to maintain our high standards of quality and safety for both our patients and staff. 

“This takes a level of commitment and teamwork that is not always easy, but the people of Michigan Medicine should be commended for their efforts to make this work.”

Miller said the financial performance still allows capital investments to move forward, like construction of the new D. Dan and Betty Kahn Health Care Pavilion, and the new specialty and mail pharmacy facility in Dexter. Prudent management of cash reserves allows for these investments to continue despite difficult financial circumstances.

The new 12-story hospital will house 264 private rooms capable of converting to intensive care, a state-of-the-art neurological and neurosurgical center, high-level specialty care services for cardiovascular and thoracic patients and advanced imaging services. The 690,000-gross-square-foot building is expected to open in fall 2025.

Also planned is a major expansion into specialty and mail pharmacy services at a new facility in Dexter. The expansion will allow Michigan Medicine to more than double the number of prescriptions it fills each year through its in-house pharmacy.

Marschall S. Runge, chief executive officer of Michigan Medicine, expressed gratitude to Michigan Medicine employees who have successfully managed many challenges including labor market instability and supply chain shortages. 

“Our teams are resilient, dedicated and quick to find innovative solutions for whatever problem arises,” said Runge, who also is dean of the Medical School and executive vice president for medical affairs. “I’m grateful for all that our Michigan Medicine employees do every day to make us a health care provider of choice in the state of Michigan. 

“Our financial results represent their talent and commitment to the highest standards of patient care. In fiscal year 2024, we expect to deliver that exceptional, life-changing care in more than 6 million outpatient visits and nearly 90,000 discharges in our hospitals.”

The regents also approved a budget that sets Michigan Medicine financial performance targets for FY ’24, which begins July 1. The plan aims for a 0.7% operating margin, inclusive of Sparrow Health System.

This financial performance allows Michigan Medicine to continue to invest in people, technology and facilities. 

“We will continue to invest in our incredible teams and innovative ways to provide high quality care across the state, including building on our new partnership with Sparrow Health System,” Miller said.

“Recruitment and retention of our workforce and continuing inflation and rising costs will remain challenges in the next year. But we have a team at Michigan Medicine that is ready and willing to do what it takes to maintain the highest standards of patient care.”


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