Although the Medical Center saw a 4.5 percent drop in patient admissions since January for the 2009 fiscal year, its revenue stream is still on pace to surpass the previous fiscal year’s.
Larry Fitzgerald, the Health System’s chief financial and business development officer, said because of the economic situation, most hospitals across the nation are generating lesser revenue compared to previous years.
“It is my impression that virtually all academic health centers and virtually all hospitals are experiencing activity in their hospitals that is less than it was in previous years as the result of the economic recession, high unemployment, individuals losing their heath insurance benefits, and individuals being resistant to paying co-insurance deductible amounts,” he said. “It is a nation-wide issue, not something unique to U.Va.”
He said for the 2008 fiscal year, the Medical Center had about 30,000 admissions. For 2009, the Medical Center anticipates only 28,500 and 29,000 admissions, putting the hospital slightly below budget.
Fitzgerald said because of the drop in admissions, revenue is $18 million, or 3 percent below what was projected for the hospital’s operating budget. Despite the shortfall, the hospital’s revenue is still 5 percent, or $24 million, greater than the 2008 fiscal year’s revenue.
“Our activity is below our budget, but our revenue is well above the prior year,” Fitzgerald said.
In addition to the increase in revenue, Fitzgerald also said the Medical Center’s operating margin — a measurement of how much is left of a firm’s revenue after paying some costs but before paying taxes — is at about four percent, meaning the hospital makes $0.04 for every dollar before taxes, which he said is “very high” in comparison to peer hospitals.
Nearby Martha Jefferson hospital has not seen the same decrease in admissions. Abigail Rich, communications coordinator at Martha Jefferson Hospital, noted that Martha Jefferson is “on track for admissions for our budget for this year.”
To adjust for what some local hospitals may not be experiencing, Fitzgerald said the Medical Center has sought to control its expenses. The augmented revenue is the result of both rate and outpatient activity increases, he added.
Despite the drop in admissions, Fitzgerald expressed hope for the future and said the hospital will embark on several projects. These projects include adding a 72-bed tower and a long-term acute care hospital located at Northridge that will hold 50 beds. Fitzgerald said that these two construction projects will be completed in the next two to three years.
“I think that there will be a large growth in patient activity as the economy turns around,” he said. “That’s why we’re continuing with our construction projects.”
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