Becker's Hospital Review

28 CFO / FINANCE Vanderbilt University Medical Center points to Epic rollout for 68% drop in operating income By Ayla Ellison N ashville, Tenn.-based Vanderbilt University Medical Center saw revenues increase in fiscal year 2018, but the hospital ended the period with lower operating income, according to unaudited financial documents released in August. Here are five things to know about the hospital's fiscal year 2018 results: 1. VUMC reported operating revenues of $4.1 billion in the 12 months ended June 30, up from $3.9 billion in the same period a year earlier. e hospital said the financial boost was largely attributable to higher net pa- tient service revenue, which climbed 3.4 percent year over year. 2. VUMC's operating expenses increased 8.3 percent year over year to $4 billion in fiscal year 2018. e hos- pital saw expenses across several categories rise, includ- ing a 7.2 percent year-over-year increase in expenses related to salaries, wages and benefits. 3. "e increase in salaries, wages and benefits is pri- marily due to increased staffing to meet additional demand associated with higher net patient service revenue, research contracts, along with training costs and post-live ramp up related to our EMR system im- plementation," VUMC said. Higher consulting and management fees related to the Epic EMR implemen- tation and an increase in subcontract expenses related to increased grant and contract revenue also caused the hospital's expenses to rise. 4. VUMC ended fiscal year 2018 with operating income of $56.2 million, down 68.5 percent from $178.5 million in the same period a year earlier. e decline was large- ly attributable to the rollout of the new EMR system. VUMC said it had planned for future operating income reductions due to the implementation. 5. "We successfully completed our EMR implementa- tion in November and we anticipate the new system will yield future efficiencies," VUMC said. "However, in the year of implementation, increased operating expenses related to implementation caused a reduction in operat- ing income. e EMR implementation put pressure on clinical volumes in the post-live period. Although we have achieved net patient services revenue in excess of our budget, the implementation has muted procedural volumes." n NYU makes medical school tuition free for all students By Julie Spitzer N ew York University in New York City is covering tuition for all its medical students regardless of their economic back- ground in an effort to alleviate the nationwide shortage of medical researchers and primary care physicians, reported The Wall Street Journal. Medical schools across the U.S. are looking to attract new students, but raising tuition and loan balances are pushing would-be physi- cians into higher-paying professions. In the U.S., about 72 percent of 2018 medical school graduates had an average debt of $195,000 in loans, according to student surveys by the Association of American Medical Colleges cited by WSJ. NYU School of Medicine has already raised more than $450 million of the roughly $600 million it says it needs to fund the tuition pack- age. NYU said it will give 92 first-year students full-tuition scholar- ships, along with 350 more students already partway through the MD-only degree program. Another 10 are already covered through joint MD/PhD programs. "This is going to be a huge game-changer for us, for our students and for our patients," Rafael Rivera, MD, associate dean for admission and financial aid, told WSJ. The school will also refund students who have already made out-of-pocket tuition payments for the current year, and it will return loans students may have already taken out. Students receiving financial aid from the scholarship can select whichever specialty they like, but school officials are hopeful the packages will drive graduates into less-lucrative areas or to practice in underserved communities. Tuition for NYU School of Medicine in the 2018-19 school year, which is now covered under the scholarships, is $55,018. Most medical stu- dents are expected to pay about $29,000 in annual room, board and other living expenses, according to WSJ. n 450 hospitals at risk of potential closure, Morgan Stanley analysis finds By Ayla Ellison M ore than 15 percent of U.S. hospitals have weak financial metrics or are at risk of potential closure, according to Busi- ness Insider, which cited a report from Morgan Stanley. Morgan Stanley analyzed data from roughly 6,000 hospitals and found 600 of the hospitals were "weak" based on criteria for margins for earnings before interest and other items, occupancy and revenue, according to Bloomberg. The analysis revealed another 450 hospi- tals were at risk of potential closure, according to Business Insider. Texas, Oklahoma, Louisiana, Kansas, Tennessee and Pennsylvania had the highest concentration of hospitals in the "at risk" pool, ac- cording to the report. n

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