June 18, 2015
The U-M Health System reported positive fiscal year-end results Thursday, with an anticipated 3.2 percent ($86.9 million) operating margin on budgeted operating revenues of $2.7 billion for the U-M Hospitals and Health Centers.
This financial performance helps position the university's clinical enterprise for continued investment in support of the Health System's goal to advance world-class patient care, education and research.
T. Anthony Denton, acting chief executive officer and chief operating officer of UMHHC, presented the positive projection of year-end results for fiscal year 2015 along with the fiscal year 2016 budget to the Board of Regents.
He credited the positive financial performance of FY '15 to strong patient volumes and high levels of engagement of physician faculty, nurses and support staff across all UMHS clinical programs and care locations.
"We are very pleased with our fiscal year 2015 results. Our talented and dedicated people are the difference," Denton said.
Denton said the results also were driven by improved patient access, created by opening new facilities that increased clinical capacity, including:
• Northville Ambulatory Health Center.
• Joyce and Don Massey Family Foundation Adult Emergency Critical Care Center.
• New operating room capacity for adult patients.
The 100,000-square-foot primary and specialty care center in Northville, which opened in summer 2014, has improved access to U-M care for patients in metro Detroit. It is running at more than 70 percent capacity. Occupancy at all UMHS hospitals was very high at 87 percent during FY '15.
Denton noted that in addition to keeping up with rising patient-care demand, UMHS teams of physicians, nurses and administrators worked hard to continue the implementation of a new electronic health record and billing system known as MiChart.
Also, regents approved a budget that sets a higher financial performance target for the fiscal year that begins July 1. That target is a 4.0 percent operating margin on revenues of $2.9 billion, based on further increases in patient activity and effective management to reduce the rate of expense growth.
UMHS Chief Financial Officer Paul Castillo said UMHS leaders are continuing to work on providing high-quality care while still containing cost growth.
Castillo noted that the Affordable Care Act did have an impact on clinical operations and financial health during the past year. The percentage of care paid for by Medicaid increased more than one percentage point, to 16.24 percent. That has contributed to a decrease in uncompensated or "charity" care. In FY '14, the Health System provided more than $152 million in uncompensated care. In FY '15, that is projected to decrease to $110 million.
"We can be very proud of achieving our financial target. We plan to continue to focus on adding value while improving operational efficiencies in the coming year," Castillo said.