The state Board of Regents approved a 6 percent rate increase for the University of Iowa Hospitals and Clinics to become effective on July 1.

Ken Fisher, the UIHC associate vice president for finance, said the increase has consistently been 6 percent for the last six years that he has worked at the UI Hospitals and Clinics. UI Vice President for Medical Affairs Jean Robillard said it has been at this level for roughly eight or nine years.

The increase will generate roughly $1 million for the $1.2 billion enterprise annually.

UIHC officials said the rate increase wouldn’t affect most direct-payer patients because most people are covered by third-party insurance.

The increase will not raise the UIHC rates to national levels.

“The UIHC is at the 33rd percentile for prices,” Robillard said, “It suggests we could be higher than we are now.”

But the 6 percent increase is the maximum increase the hospital can implement before third parties have the ability to rewrite their clauses and change the relationship between the hospital and the third parties.

“We’ll have to adapt,” Robillard said.

The rate increase follows a rise in the cost of pharmaceuticals, along with supplies and expenses that come with running the hospital.

Additionally, the hospital is undergoing several expensive projects to expand its practices.

It is undertaking roughly $246 million in capital projects for fiscal 2014, including the expansion of the Iowa River Landing Clinic and building the new Children’s Hospital.

But the hospital is taking a hit from a federal level.

The Affordable Care Act implementation will cost the hospital roughly $14.4 million, and sequestration will account for an additional $4.3 million loss, totaling roughly $18.7 million annually. Those programs will take effect in January.

The UIHC also faces potential issues resulting from a change in the Medicaid program could result in changes of rates and payer processes.

Fischer said the hospital will continue to work toward increased growth and higher volumes — a typical way for the hospital to bring in additional revenue. 

“We have to be able to deliver the same quality of care at lower costs,” Robillard said.