Facing the loss of more than $14 million in funding from the previous fiscal year, Medical College of Georgia Hospital and Clinics could be seeing personnel cuts, said Dr. Ricardo Azziz, the chairman of the boards that oversee the health system.
The health system’s board and a board that oversees University Hospital held separate meetings Thursday, providing a rare glimpse into two of Augusta’s largest entities that are facing increased financial pressure.
The board of Georgia Health Sciences Health System saw that the health system ended the fiscal year June 30 with more than $20 million in surplus, $6.7 million more than it had budgeted, said Patricia Brownlow, the chief financial officer for Physicians Practice Group, who presented the financial picture.
That included $14 million, however, in previous-year revenue that will not recur this fiscal year, and new projects are adding $8 million in depreciation and interest this fiscal year, she said.
That is set against a trend of declining state support – the university has been cut $40 million over the past three years – decreasing revenues and increasing expenses, Azziz said.
That means cuts and efficiencies have to be found, he said.
“The single largest expense of any health system is people,” he said. “So if you are trimming expenses you will have to look at people. The question that people have asked me is what is the extent and how much. If I knew, we would be telling you.”
The system will try to do it in a strategic and targeted way.
“But we also understand our responsibility to the community to make sure that it is minimized to the extent possible,” Azziz said. “One of the ways of dealing with increasing expenses and decreasing revenue to meet the goals of the state is to partner with other health systems, with our colleagues, to try to maximize our benefits.”
Investments in key areas for clinical growth and partnerships such as the increased residency training at University Hospital also are expected.
For example, there will be an increased number of residents based at University, which had long been a teaching hospital for MCG until several years ago, when a restriction on hours and other factors caused MCG to pull back those slots.
University has about five slots that have full funding and 10 more that are partly funded, said Dr. William Farr, the chief medical officer for University. The number of slots is still being worked out, he said. In addition to helping train new doctors, that could benefit University, Farr said.
“It allows us to look at their best trainees and for their best trainees to look at us,” he said.
MCG Hospital and Clinics isn’t the only one anticipating a financial blow.
University’s management is closely watching a federal deficit reduction super-committee that needs to come up with $1.5 trillion in cuts, much of them in entitlement spending, said University CEO Jim Davis.
“Medicare is the biggest of them all,” he said, adding that it accounts for more than half of University’s patient revenue. “There’s no way they’re going to get where they need to go (without touching Medicare).”
If Congress does not enact the committee’s recommendations by Dec. 23, an automatic $1.2 trillion cut kicks in, but Medicare cuts under that situation are capped at 2 percent, Davis said.
That still means $2.5 million less for University on top of $10 million slated to go away under the Affordable Care Act, he said.