Page 1 of 2 From: UMMC - Campus Notification Date: Wednesday, Feb 22, 2017, 6:23 PM. To: All UMMC Mailbox Users February 22, 2017 UMMC CAMPUS MEMO TO: All Faculty and Staff FROM: Dr. LouAnn Woodward, Vice Chancellor for Health Affairs SUBJECT: Financial Action Plan For the last few months we have been closely watching our financial situation as we've experienced unanticipated cuts to our revenue. Late this afternoon | met with about 100 senior administrators to announce an action plan to improve our financial position for the remainder of the fiscal year that ends June 30. By March 6, I have asked for detailed plans from all divisions that will allow us to save approximately $24 million during the next four months. At the administrator's discretion, these savings can be achieved through a combination of expense reductions or revenue increases, but the reality is that most of it will likely come from expense cuts. Knowing that our hospitals have been working hard on labor expense management, | am protecting bedside patient care from this cut. All other measures to meet this savings goal are on the table, including eliminating programs and reducing the size of our workforce. Regrettably, we will not be able to reach our financial goal without some reductions in staffing. ‘As | mentioned in a recent VC Notes, a number of factors have contributed to our present financial difficulties. Chief among these is a decrease in our disproportionate share (DSH) funding, which we receive through the state Division of Medicaid for providing care to large numbers of Medicaid and uninsured patients. Our DSH allocation is always difficult to predict, but this year it currently stands at $35 million below our initial projection. On top of that cut, as of Tuesday we now have received more than $8.2 million in reduced state funding for the current fiscal year. Revenue cuts of this magnitude, although painful, would be manageable in a normal year, but coupled with the DSH reduction they require a more aggressive response. Even as we've experienced these reductions in funding, we have been working on a number of projects to decrease expenses or increase revenue. As was reported in Monday's eCV newsletter, our value Exhibit 1 3/22/2017Page 2 of 2 analysis teams have achieved $19 million in supply chain savings since 2015. Other groups have been working hard to improve revenue cycle management, shorten length-of-stay, and drive clinical quality improvement and the savings it yields. These and other efforts to become a leaner organization will continue ‘As we look to be more efficient, we can’t ignore the need to invest in our future. For example, we've grown our clinical programs substantially during the last two years, even though it will take some time for those investments to pay for themselves. We have to be thoughtful about how we shepherd our resources and look for opportunities that are sustainable and will move us toward our ultimate goal of improving our state’s health status. You'll learn more about the financial action plan as it develops at the unit level. | ask that you please be patient and let your administrators work through this process in an orderly way. Our current financial challenges are not unique to us. Across the country, academic medical centers and other industry players are struggling to cope with a historic period of change and disruption. Clearly we have to continue to excel at our core missions of education, research and patient care and maintain the integrity and quality of those pursuits. But we also must sustain ~ for the rest of this year and beyond — sound business practices of expense control, wise investment and decisive action ina changing marketplace. | want to be clear. Achieving this $24 million in savings will not “solve” our problem. The fact is that our revenue sources will continue to be under pressure, so this focus on cost will not end on June 30, 2017. In some ways, this is the “new normal” for us and for other academic medical centers. The target I've set for us to reach by year-end will be hard on everyone. But it is achievable. We've faced bigger challenges before, and with everybody pulling together, we'll face this one, too. Thank you for your commitment to UMMC. Individuals who have received this information in error or are not authorized to receive it must promptly return or dispose of the information and notify the sender. Those individuals are hereby notified that they are strictly prohibited from reviewing, forwarding, printing, copying, distributing or using this information in any way. 3/22/2017Regular General Fund Appropriations For Fiscal Year 2009 Budget All Educational Activities (Excludes IML Agricultural Units) $3,079,458,935, 62.02% ‘Total Regular General Fund Appropriations (Chart Total) $4,965,017,011 General Fund Reapproptiations from FY 2008 30,426,000 ‘General Fund Transfers to Budget Contingency Fund 14,127,000 ‘Total Regular General Fund Appropriations, Resporopriations and Transfers $5.149,509,011 PME 5 Exhibit 2Regular General Fund Appropriations For Fiscal Year 2010 Budget i a g H All Educational Activities (Excludes IHL Agricultural Units) '$2,949,037,424 62.1% ‘Total Regular General Fund Appropriations (Chart Total) $4,748,807,261 ‘General Fund Reapproptiations from FY 2010 7,405,000 General Fund Transfers, 149,672,000 ‘Total Regular General Fund Appropriations, Reappvoprations and Transfers $4.905.884251 PAGE 5Medicaid Funding FY 2008 to FY 2017 2108 208 2008 Appropriation Dat ‘GENERAL FUNG soagenges —~ape3760 _so7gysz0 HEALTH Gas EXPENDABLE FUND Tobaeee na seas a ‘CONTINGENCY FUNDS 7 a0 MEDICAL SUENT FUND rg ona on cr 70870000 MEDICAL GARE FUND (rise Govornann isalereUPL and OSs mB) 1a fT 0 oe roger FE Sig ero TPs as NLS a) 2 — TO — Ser aia "FEDER FONDS - Wana Rall Fara Fan as i “FESTA pots a RESID ODORS crane ig On Pons — separ ai SL CAREFUND- Ges Rovrun Aecoemri x o ‘Sie Sea toate oa Po Oo Ba rrr ‘STWR STATE AGENCE Tospou sa espa Tora Sees ausee SOATEST ——asenzrzsse, SOT NTE “Fiipsscamarttenemmesee 133% toch de eteonnmeain beng trecvetd const son. 200 200 2000 208 2000 ‘Apopition Duet Govomra rts FOROS. 3008272 EET rant ‘FEDERAL FUNDS Kaba tet Feil Fun 7 cL ashy COR FIRE o_o a ee age nUN REIS cesta eS a rr ‘tier Specs Funes (sec Fund Cah pase 1 See SS irr ton a aS ETE svese3510 ‘20% $58906619 rue 931.0037 savings in "ato bacon fest 1H poymans amo a0 a0 2010 ‘vpropision Dele Govarara cuts Appropriation —— peers unig 25000500 (2eS00OH)_zsae0en0 -HEALIM GARE EXPENDABLE FUND Tamassia] 700.08 noe “BUDGET CONTINGENCY FUNDS Taek Eo “aaa ee ea aeerosar aeaoTa7 ‘TED cane RSSERETENT FOND Tag Ras oT is 23 66 6897500 ‘MEDIGAL CARE FUNO Ch ari Sad OSH sat a i Sai RAL FUNDS a ‘FEDERAL FUNDS — Kana Rael eae Fe 7 7 ‘FEDERAL MEDICARE Pat m ag on Fe a ‘tr Sposa Fas Spas Fund Cash Bales) Sa sar HE STATE NGENGES Tro ao Trrpea ee Tom mee ZEIT ——— PART — SALAS, amnar0 12705 ete: nou ore date ues th Gove cxting $148 on om provers.Regular General Fund Appropriations For Fiscal Year 2011 Budget Al Educational Activities (Excludes IHL Agricultural Units) '$2,621,525,749, 60.85% ‘Total Regular General Fund Appropriations (Chart Total) $4,370,987,122 General Fund Reappropriations from FY 2010 6,782,000 General Fund Transfers 193,904,000 Total Regular General Fund Appropriations, Reaporopritions and Transfers 0.059.122 PAGESRegular General Fund Appropriations For Fiscal Year 2012 Budget AllEducational Activities (Excludes IHL Agricultural Units) '$2,776,267,451 61.77% Total Regular General Fund Appropriations (Chart Total) $4,494,767,060 General Fund Reappropriations from FY 2011 6,623,000 General Fund Transfers 426,873,000 ‘Total Regular General Fund Appropriations, Reapproprations and Transfers $4,628,263,060 Pas 5Regular General Fund Appropriations For Fiscal Year 2013 Budget All Educational Activities (Excludes IHL Agricultural Units) $2,750,393,248 58.60% Total Regular General Fund Appropriations (Chart Total) $4,693,462,000 General Fund Reappropriations from FY 2012 8,765,000 General Fund Transfers 49,622,038 Total Regular General Fund Appropriations, Reappropriations and Transfers. § 4,751,049,038 Pace 5Medicaid Funding FY 2008 to FY 2017 at FEDERAL FONDS Soa 6g6" Ta es ‘FEDERAL FUNDS - ng Ra Fool Fama (yo = a FEDERAL MEDICARE PART B PREM REFUND of rtahng Ge. Fane 2 z ‘ir pce See Fa Co Ba Tara Tara OTHER STATE AGENCIES Tar 20387 Ta sa Sora 5700 z nore Sa espero FY 2012 ‘ata Ss Super Se Suppo Tot Buse ama mn ote opropiton Dek ‘SemERAL FUNDS swaanoars — = HEALTH GAR eXPENDABLE FUND [Tonnes tans -raroe {BUBGEY CONTINGENCY FUNS Sous ‘enyoto ut Soures Space Fund Cah lenge Tape rarepeal eee aaa ‘Sinn STATE NOES eB Jorn: ZS .—r7 EEE ‘Site Suppor! Tt Bute aos ona aaa 2010 2013 ‘Avprpoton Doe ———Raepropition Appropriation ‘GENERAL FURS ——— smearzase am: HEALTH CARE EXPENDABLE FUND Toneece an) EL SUDGET CONTINGENCY FUNDS. aaa OB Eh “Gonyvor Sats Booreo Spall FURS CHEh Bates v 2 “EDISA CARE ASSESS FUND agra aa Tp a TASER EE ‘HEDIGAC CARE FOND ioe Goverment Tralee UPL ond OSH wed HE 7 2 as ee rr 2 . Tara ASE, BEES aaa ORNL Your Basso ee x oe 9a ‘Sate Suppo Tet Bude! ezasra003 80mRegular General Fund Appropriations For Fiscal Year 2014 Budget crane 1 Teen ves ou “ESTES OSE 8 POS Tis Social Welfare $737,879,740 14.68% Al Educational Activities (Excludes IHL Agricultural Units) $2,842,501,420 58.56% Total Regular General Fund Appropriations (Chart Total) General Fund Reappropriations from FY 2013, $.5,025,963,825 7,130,000 General Fund Transfers 12,888.11 Total Regular General Fund Appropriations, Reappropriations and Transfers $5,050,081,955 PAE 5Regular General Fund Appropriations For Fiscal Year 2015 Budget Social Welfare $991,629,960 18.06% All Educational Activities (Excludes IHL. Agricultural Units) $2,954,574,351 53.80% ‘Total Regular General Fund Appropriations (Chart Total) $5,491,766,204 General Fund Reappropriations from FY 2014 General Fund Transfers 19,380,000 0 Total Regular General Fund Appropriations, Reappropriations and Transfers $ §,501,146.2Regular General Fund Appropriations For Fiscal Year 2016 Budget Social Welfare $1,080,002,052 18.92% All Educational Activities (Excludes IHL Agricultural Units) $3,095,618,316 84.22% Total Regular General Fund Appropriations (Chart Total) $ 5,709,643,322 General Fund Reapproprations from FY 2015 34,448,000 Gonoral Fund Transfers 0 Total Regular General Fund Appropriations, Reappropriations and Transfers $ 5.744.058.9322 pasesMedicaid Funding FY 2008 to FY 2017 ae ame aoe 214 ‘Avpropiion ——Defet——_—Ranpropriaton ‘CAPITAL EXPENSE FUNDS. ryver Suis Source Spel Fund Cath Baines TEAL ORE RD ag Ra ad pa ca mm HEDIGAL CARE PUI Grint Governor Tate UPL an OSH Sa HO) * 2 FeosoL roe Sea SaaS ‘GSpot Fue aa aoa, ‘STHER STATE AGENCIES as wie Tort IS) BHO sas 7 aaa ‘Se Sapp of Toa Buet 218 a6 218, Appropriation Apropston SR ae sayarase saa HEALTH cane SXPENDAGLE FUND Tebaces CE ‘BUDGET CONTINGENCY FUNDS 2 . ‘ERBTAL BPENSE FOROS 2 TE ‘TEDCA CARE ASSMAN aig ome a a FTE THEDICAC CARE FUND let Govern Te SOSH ss Bizsr0,e6 Zaze16 a FEDERAL FINS ane. Eos 1 Daa a See STATE AGERE a ae ‘Stee oppor Het Tota Bug “EABTTAL EXPENGE FUNDS. 2a EET “ESOC ORE SESE FD ag a TT REA “RED THEDIGC EARE FUND rt Gramma awe UR ad OSM wa RON] — TEs —eEsre 65 FEDERAL FOROS aon Teese io a Siren ae nota mE = Jone m oan State Spo ot Teta Bt esaosgase ears srasooses 70% sosrorasso 150%Regular General Fund Appropriations For Fiscal Year 2017 Budget : t 5 Hl i i Social Welfare $1,043,393,411 18.02% All Educational Activities (Excludes IHL Agricultural Units) $3,071,444,984 53.08% Total Regular General Fund Appropriations (Chart Total) $6,788,311,919 General Fund Reappropriations from FY 2016 6,660,000 General Fund Transfers 0 Total Regular General Fund Appropriations, Reappropriations and Transfers $5,194.971,919Medicaid Funding FY 2008 to FY 2017 ar 200 or? repmpiaen Dale Ranppion—_-ppepaton as seg ———— —— oer SE oR ex eONRLE FORD ToS ey ieee aan SONTRGENGY FUNES ° * EL ESE AS wane OR a ——_——— a ———ar 3a TBS ‘Feb FUNGS — “Tie 05 Tiare 3 Tae. 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