UWMC's bottom line slips

Kayla Webley
2004-04-22
The Daily

The UW Medical Center's (UWMC) projections for the 2004 fiscal year show a $12 million drop in the center's operating margin, equivalent to a business' profit.

Officials at the center attribute the slip to increases in capital expenses, such as the beginning of payments for the new surgical pavilion, and an increase in the number of un-billable procedures for uninsured patients.

According to Kathleen Sellick, executive director of UWMC, the operating margin for the 2004 fiscal year, which she calculated based on its first eight months, is $14.3 million. Last year's operating margin was $26.7 million.

According to Sellick, the number of uninsured patients the UWMC treated has jumped significantly from 2003, costing the center $8.6 million that cannot be recovered.

"The operating budget would be identical, within less than $1 million, of last year if the increase of care for the uninsured hadn't occurred, and if we hadn't had the pavilion," she said. "But that was all anticipated.

"If we had not had the huge increase in the uninsured, we'd be able to cover everything except for the increase in [cost] for the building."

The 2004 fiscal year is also the first year the center has had to pay $3 million to cover the construction costs of the new surgery pavilion, said Sellick. UWMC will pay the $3 million for the next 30 years.

"The building cost $85 million. It's like a mortgage; we had to pay for it up front. We borrowed money and so now we are going to pay back our loans over a period of time," said Sellick.

According to Sellick, the increase in the Pavilion's expenses was planned.

"The increase in expenses for the actual building are very close, within a couple hundred dollars, of what we anticipated they would be," she said.

The pavilion was created to meet the demands of the increasing number of operations. According to Sellick, with the new facility, surgeries have already increased 6 percent. She added that the number is expected to grow over the coming years.

"We fully anticipate over the next two or three years that the (cost of paying the pavilion's construction) will be significantly offset by the incremental volume of patients that we will be able to care for," said Sellick.

Sellick said she is aware of the perception that the pavilion will not be able to pay for its construction costs. However, she said, the new facility will also attract more business to the rest of the center.

"You have to look at it in a multi-factorial way," she said. "Look at it in its entirety for the medical center because it is not a separate and distinct facility. It is integrated into what we do, and because of it we will not only be able to expand the (surgical) services there, but we'll be able to expand the number of services that are performed in [the UWMC]."