UNC Health Care bounces back from operating loss

Jul. 22, 2014 @ 02:24 PM

While UNC Health Care was affected by significant costs last fiscal year from its a new electronic health record system, the Chapel Hill-based health care system is expecting to be more flush in fiscal year 2015.
The health care system’s board of directors approved a budget for fiscal year 2015 on Monday that projects an operating income of $50.3 million. Counting investment income and other non-operating income, system officials expect that the system will post a total bottom-line profit of $104 million.
That’s an improvement over the prior fiscal year, when it posted an operating loss. For fiscal year 2014 that ended in June, the system has projected that it will have seen an actual operating loss of $12.2 million for the year. However, counting non-operating and investment income, the system is projecting that it will have seen a bottom-line profit of $90.4 million.
UNC Health Care Chief Financial Officer John Lewis said the system does not face the same level of expenses in fiscal year 2015 related to Epic@UNC, which had a “substantial impact” last fiscal year.
The system most recently launched Epic@UNC at its Raleigh-based hospital system, Rex Healthcare. It had already launched the system at UNC Hospitals in Chapel Hill as well as at Chatham Hospital, and UNC Physicians Network West in April.
The roll-out of Epic@UNC to additional locations in the system pushed back the approval of this fiscal year’s budget to later in the year, said Jennifer James, a spokeswoman for the system.
Also at the meeting, Lewis said the system has pushed “very hard” at UNC Hospitals and at Rex to build back up its operating margin, which is the ratio of the system’s operating revenues to costs, to historical levels.
He said the system needs to hit an operating margin target of 3 to 4 percent to afford its long-term capital plan. The system expects to see a margin of 1.7 percent in fiscal year 2015, according to budget information presented at Monday’s meeting.
“Quick math tells you that’s not enough,” Lewis said.
He added that across the entire organization, the system is working to do things more nimbly and cost-effectively.
The UNC Health Care system has grown to include eight hospitals, soon to be nine, according to Dr. Bill Roper, CEO of the system, dean of the UNC School of Medicine and vice chancellor for medical affairs at UNC-Chapel Hill.
Roper said the system will be working with a consultant, Huron Consulting Group, to help determine the best ways to integrate and “get synergies” across the system.
“Just a few years ago, we were two hospitals (between) a main one in Chapel Hill and the one in Raleigh – Rex -- and now we’re eight hospitals, soon to be nine,” he said. “And integrating that into a single, well-functioning system is a challenge.”