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Meeting looks at VUMC’s financial picture

Feb. 14, 2013, 10:57 AM

At a midyear Clinical Enterprise Town Hall meeting, those attending were updated on Vanderbilt University Medical Center’s year-to-date performance and the ongoing impact of separate pieces of federal legislation — the Patient Protection and Affordable Care Act of 2010 and the Budget Control Act of 2011, which has come to be known as sequestration.

C. Wright Pinson, MBA, M.D., deputy vice chancellor for Health Affairs and CEO of the Vanderbilt Health System, spoke about the need for continued efficiency and innovation as a sustained response to today’s challenging economic environment.

C. Wright Pinson, MBA, M.D.

VUMC continues to face economic challenges through declining reimbursements from state and federal programs, estimated at $26 million per year. Further, if Tennessee’s legislators move to prevent expansion of Medicaid enrollment through the Affordable Care Act, VUMC’s losses through uninsured care will grow markedly as millions of dollars in direct payments historically supporting care for the uninsured, such as Disproportionate Share Hospital (DSH) payments, are scheduled for elimination.

And through sequestration there could be further reductions to federal funding the Medical Center relies on to support residency training and biomedical research.

Pinson said the Medical Center’s clinical enterprise is performing very well, but given these headwinds cannot afford a lapse in either productivity or expense control.

“We have done very well. Our second quarter finance pillar goals are positive for six of our nine measures and we are managing our three expense goals within the targeted range. We just need to keep it up,” said Pinson. “We believe we can achieve our financial goals for this year, but it’s going to take the efforts of everyone.”

Pinson said it is essential to maintain the current pace for outpatient clinical services and slightly increase inpatient volumes during the second half of the fiscal year.

“Our volumes for outpatient visits are very strong and we need to keep this up,” he said. “We also need to work to increase the efficiency of patient flow.”

Pinson highlighted recent successful efforts such as the Monroe Carell Jr. Children’s Hospital at Vanderbilt nursing leadership redesign and the Winter High Census Plan, which facilitated movement of patients from the Adult Emergency Department to inpatient beds, thus reducing ED overcrowding and wait times.

Over the first two weeks after implementing the Winter High Census Plan, there was a 67 percent reduction in patients holding in the Adult ED.

As another example, he cited the patient flow project in the adult hospital. “We need continuous, long-term improvement in patient flow to put the patient in the right place at the right time, the first time,” he said.

Pinson said the other essential component to successful financial performance for the remainder of the fiscal year is strict expense control.

“Everyone should expect questions about expenses, particularly if they are not directly related to patient care,” he said. “Like all other hospitals, we are experiencing reductions to reimbursements; therefore we need to reduce our expenses.”

The entire Medical Center has been focusing sharply on expense control for several years. Through countless operational improvement and expense control efforts, VUMC is in a better financial position than many peer institutions.

Pinson reminded the audience that attention to expense control is the “new normal.”

“I want to be clear, the efforts to reduce and control expenses, and the call for increasing efficiency will continue into the next fiscal year and beyond,” he said. “We need to stay engaged in these efforts in order to continue to meet the needs of the new environment in which we work.”

Pinson closed his remarks with comments about the path to the Medical Center’s future. He went on to outline efforts that will focus on the outpatient experience into fiscal year 2014.

“VUMC aspires to shape the future of health and health care. To do so, we must constantly innovate toward a model that is evidence based, but also patient focused and personalized to reflect the individual’s needs, values and preferences.”

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