Hospitals and Health Centers budget to build on recent success

ANN ARBOR, Mich. – The University of Michigan Board of today approved the U-M Hospitals and Health Centers fiscal year 2000 budget which projects an operating gain of $7.2 million on revenues of $864.1 million.

The UMHHC also is expected to close the books on the 1999 fiscal year with a better than expected operating margin. Last year, the UMHCC budgeted a $1.5 million operating gain for fiscal year 1999, but now projects the final operating gain will be $4.1 million.

“At a time when many other academic medical centers and community hospitals are struggling financially, we are proud to have grown our clinical volumes, enhanced measures of patient satisfaction and finished the year in the black for fiscal year 1999,” says Gilbert S. Omenn, M.D., executive vice president for medical affairs in the U-M Health System. “With continuing downward pressure from all payors, we are entering fiscal year 2000 with a solid plan to stay in the black and continue excellent service to patients, their families, and referring physicians. We are also working nationally to seek some redress for teaching hospitals.”

A key cost-saving component to the new budget is a move to rebase existing departmental budgets at an average of 96 percent of their fiscal 1999 base by implementing greater efficiency. Hospital leaders also are projecting a 4.5 percent increase in discharges and a 1.8 percent increase in clinic visits during fiscal 2000. Additionally, hospital room rates will increase 3.6 percent, allowing for additional revenue while still keeping U-M room rates in line with the local community hospital. Average length of stay is expected to remain at the fiscal 1999 level of 5.8 days.

It is anticipated that employees will see annual raises of 3 percent to 3.7 percent.

“The hospital, with this budget, will continue to be able to maintain its financial position as a leader in the industry,” says Thomas Biggs, chief financial officer, U-M Hospitals. “As a result, we will be able to invest in technologies and systems that will continue to improve upon patient care and satisfaction.”

Gilbert S. OmennU-M News and Information ServicesUniversity of Michigan