UIHC expected to take unprecedented $100 million hit this fiscal year due to COVID-19 with more losses on the horizon
Officials from University of Iowa Hospitals and Clinics will present the state Board of Regents with data regarding the $100 million expected financial loss due to low patient volumes caused by the novel coronavirus pandemic. “These will be the biggest losses in our history.”
University of Iowa Hospitals and Clinics is seen on Sept. 17, 2018.
May 29, 2020
University of Iowa Hospitals and Clinics leaders are expecting the response to the novel-coronavirus pandemic to take an unprecedented $100 million financial toll on the institution in the final four months of fiscal 2020, which ends in July. An even larger drop in revenue is anticipated for fiscal 2021. Hospital leaders plan to discuss the losses during a virtual state Board of Regents meeting on June 4.
In a presentation released with the regents agenda for the meeting, UIHC reported it had historically low patient volumes in April and May, a trend seen across the health-care system. UIHC resumed elective surgeries in late April, after the governor lifted the ban on elective surgeries for hospitals that had enough personal protective equipment, and a plan to conserve it. The March order from the state initially aimed to curb a statewide shortage of personal protective equipment.
Federal stimulus funding for UIHC is expected to be between $30-40 million, according to the presentation. UIHC could also lose $20-30 million per month in fiscal 2021 if patient volumes do not increase or if expenses aren’t controlled.
The financial impact of COVID-19 is expected to affect UIHC’s budgeted 3 percent margin necessary for capital improvements. According to the presentation, UIHC needs to have a 3.5 percent cushion to have enough funding to maintain its current operations.
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UIHC uses $80 million for space renovations, equipment replacement, and building/infrastructure maintenance as their essential capital.
“These will be the biggest losses in our history,” the presentation said of the financial impact caused by COVID-19 due to volume decreases and continuing to pay employees in full.
The financial impact of COVID-19 could worsen next year, according to the presentation. Continued inflated expenses could cost $30-40 million, a potential resurgence of the coronavirus that could result in uncertain costs, and additional factors can all have an annual negative impact on UIHC financial performance.
Moving forward, UIHC will seek to improve inpatient and outpatient care and profitability through greater scheduling, interdisciplinary, and teamwork efforts, according to the presentation. Additional measures include growing high-demand programs in areas of care other than COVID-19, improving administrative efficiency, expanding hours and geographical care, and controlling labor expense and ensuring that staff function at their full potential.
UIHC officials have developed a five-point plan to “scale the next mountain,” the presentation said. As it continues to function amid COVID-19, UIHC said it will establish itself as a safe place for all Iowans. It will improve access, convenience, response, and marketing, improve efficiency in individual departments, increase interdepartmental collaboration, and increase team support.
“We are still at the beginning of the story and don’t know the exact impact or how long it will last,” the presentation said of COVID-19 and its financial impact.
Editor’s Note: A previous version of this article said UI Pharmaceuticals could face a $5-10 million loss due to COVID-19. UI Pharmaceuticals is not an entity within UIHC and is not expecting a financial loss due to COVID-19. The DI regrets this error.
