System's cost reduction plan in motion
Board of Visitors' Health Affairs Committee met Jan. 11 and heard
reports on the Health System's cost-reduction progress and the
Medical Center's finances.
W. Sandridge, executive vice president and chief operating officer,
assured board members that the groundwork was being laid to reduce
costs and improve revenue long-term, but told them not to expect
great strides immediately.
in-house Health System
committees began work this month, following recommendations made
by Computer Sciences Corporation, the management consulting firm
hired by the Health System last year to assist in the cost-reduction
project. The committees will focus on expenses associated with
administration and operating room supplies and operations. Ways
for the Health System to enhance operating revenue will also receive
attention, Sandridge said.
Sciences Corporation, which has been retained through March, projects
that the Health System's performance improvement efforts will
yield a "financial opportunity" in savings and net cash
collection between $13.9 million and $34.3 million.
The Health System management's own efforts to cut costs and improve
revenue were successful during the second quarter of the current
fiscal year, Sandridge reported.
Fitzgerald, associate vice president for Health System finance,
told the board that the Medical Center's operating margin is 4
percent. He also reported that patient admissions for the Medical
Center are 1.4 percent below budget. As a result, the center conducted
a market-share comparison study, by service, of U.Va. and other
hospitals in Virginia from 1995 to 1999, and concluded that overall
market share is flat to slightly increased, he said. Some U.Va.
services, such as coronary care and neurosciences, have gained
significant market share, while others -- obstetrics, neonatal
specialties, the Children's Medical Center and surgical services
-- have declined.
also told the board that the length of stay for Medical Center
patients has dropped to 5.2 days, 13.3 percent below the average
length of stay last year. "This positive trend contributes
to our efforts to lower costs," he said.
operating expenses to date in fiscal year 2000 are $185.9 million
-- $1.5 million below budget and $6.5 million below fiscal year
board also heard that the Integrated Healthcare Information Management
System project is proceeding as planned. All hardware and software
components are operating and technical support staff has been
trained. Currently, the software is being tailored to fit the
University's environment, which will take several months, after
which the new system will be tested before "going live"
in April 2001.