Operating and Capital Budget Recommendation for 2004

1

• Operating and Capital Budget Recommendation for
  2004
• November 25, 2003

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University Health System 2004 Operating Budget
Recommendation (Dollars in Millions)
2003 Year End
2003 Budget
2004 Proposed
Operating Revenue Operating Expense Operating
Margin Investment Income Net Gain/(Loss)
589.7 585.9 3.8 9.1 12.9
589.7 593.5 (3.8) 8.8 5.0
562.1 569.7 (7.6) 8.9 1.3
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Highlights of Proposal

• We are Continuing to IMPROVE workforce
  service quality
• health of community
• relationships with partners

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Highlights of Proposal

• Better than Multi-Year Planand in Spite of
  Legislative Cuts
• Consistent with Strategic Goals Priorities

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University Health System Bottom-Line Projected
2003 - 2006 (Dollars in Millions)
2004 Proposed
2003 Year End
2005 P
2006 P
Multi-Year Plan 2002 Current View Difference
Difference
1,332 12,949 11,617 872.2
(7,043) 1,289 8,332 118.3
(12,505) (11,348) 1,157 9.3
(21,085) (14,138) 6,947 32.9
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Highlights of Proposal

• HOWEVER.. Fiscal Strength is
  Significantly Weakened by Federal and
  State Actions

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Fiscal Strength

• New UPL Funding Continues But Declines by 3.1
  Million
• Disproportionate Share ContinuesBut Declines by
  1.2 Million
• Medicaid CHIP Program FundsCut by 24.5
  Million

8
Fiscal Strength

• UPL, Disproportionate Share, andMedicaid/CHIP
  Reductions Total 28.8 Million for 2004

9
Fiscal Strength

• Property Tax Rate Remains Constant
• Provides 11.2 Million to Help Replace Federal
  State Funds
• From Property Values 3.9 Million
• From New Property 4.7 Million
• From Payment Discounts 2.6 Million

10
Fiscal Strength

• Measurable/Accountable Management Actions
• 67.2 Million in Improvements Achieved Since
  2001
• 15 New Initiatives in 2004 Totaling 12.5
  Million
• Expenses per Adjusted Discharge to Improve by
  4.6

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Fiscal Strength

• Bottom-Line is 1.3 Million
• 8.3 Million Better than Multi-Year Plan
• 11.7 Million Less than 2003 Expected
• CFHP Improves to 1.1 Million
• 205,000 from All Other UHS Activities

12
Workforce

• Greatest Asset!
• Continue Workforce Enhancement Program
• Competitive Pay 1.8 Million
• Continue Living Wage Program
• Improved Productivity

13
Service / Service Quality

• No Service Cuts
• Increase Services by 2.6
• Maintain 2003 Capacity Gains

14
University Health System 2004 Activity Proposed
and Projected Years
2003 Year End
2003 Budget
2004 Proposed
2005P
2006P
Discharges Percentage Change Outpatient
Visits Percentage Change Adjusted
Discharges Percentage Change
22,517 (3.2) 377,126 (6.1) 36,883 (2.9)
23,263 5.8 401,371 8.1 37,979 6.8
22,984 2.1 400,057 6.1 37,835 2.6
23,549 2.5 419,970 5.0 38,766 2.5
23,761 0.9 433,721 3.3 39,115 0.9
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Service / Service Quality

• Continue to Reduce EC Ambulance Diversions for
  Medical Patients
• 59 Improvement in 2003
• 5 More Improvement in 2004
• Improve EC Service Time by 20

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Service / Service Quality

• Physician Services
• Improve Access to Specialists, IncludingCommunity
  Providers
• Add 4.5 Radiologists and 2 Residents
• ( 1.5 Million)
• Add Physician Extenders Re 80-HourLimit to
  Resident Work-Week ( 1.7 Million)

17
Partnerships

• Center for Healthcare Services Collaboration
• Improve CHCS Medication Costs
• Improve Service Organization/Continuity
• 1.7 Million to Satisfy States Match
  Requirement

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Partnerships

• Military Trauma Centers
• Healthcare Summit Priority
• Neurosurgical Trauma Coverage
• New Operational and Financial Relationship -
  TriSat

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Partnerships

• UT Health Science Center
• More Collaboration to Align Goals Priorities
• Physician Order Entry System Leadership
• 1.1 Million Savings for CMA Malpractice
  Insurance

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Partnerships

• Other Educational Institutions
• UHS Foundation Scholarships
• Nursing Professionals
• Other Health Careers

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Recommended Operating Budget
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University Health System 2004 Operating Budget
Recommendation with Projected 2005
2006 (Dollars in Millions)
2003 Year End
2003 Budget
2005P
2006P
2004 Proposed
Operating Revenue Operating Expense Operating
Margin Investment Income Net Gain/(Loss)
589.7 585.9 3.8 9.1 12.9
589.7 593.5 (3.8) 8.8 5.0
562.1 569.7 (7.6) 8.9 1.3
569.9 589.7 (19.8) 8.5 (11.3)
587.5 609.6 (22.1) 8.0 (14.1)
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Financial Performance History
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Recommended Capital
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Capital Requirements in 2004

• Capital Requirements to be Funded by 25.4
  Million From Depreciation
• Additional 30.8 Million in High Priority Needs
• Plus CFHP Capital of 248,000

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Capital Recommendation

• Approve 25.4 Million Available Through
  Depreciation Funding for Capital Requirements
• Approve CFHP to Fund Capital Needs of 248,000

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Recommendation
The Strategic Financial Planning Committee
Recommends Approval of the Proposed Operating and
Capital Budgets for Fiscal Year 2003.