UW Health: Sets $80 million target for financial improvement
Contact: Lisa Brunette
MADISON – Facing sharply increased costs exceeding declining revenue growth, UW Health has set a target of $80 million in reduced expenses and increased revenue to improve its financial performance and to continue to meet its missions of clinical care, education and research.
Reductions in expenses will not be across the board. Instead, the system will take a targeted approach focusing on areas such as improved delivery of care, labor efficiencies, and costs for supplies, pharmaceuticals, utilities and other business costs. The $80 million target is to be accomplished over the next 18 months.
Dr. Alan Kaplan, UW Health CEO, said that the current size of the UW Health workforce will be reduced, but position reductions will be done in the least disruptive way possible for staff. Reducing the use of agency labor, managing overtime and not filling open positions will be among the first steps to reduce costs. When positions are eliminated, Kaplan said, UW Health will help employees move to other areas of the organization when possible and will work with employees to seek other positions outside of UW Health if a suitable job is not available within the organization. At the same time, UW Health will continue to recruit in areas where additional staff members are necessary for patient care.
“We exist as a health care organization for one reason: to improve the health of the patients and communities we serve,” said Kaplan. “And like every other organization, we must pursue our mission while maintaining the positive financial margin that sustains our operations.
“But our financial sustainability will not improve without significant changes to make us more efficient in the delivery of high-quality patient-centered care. We will join many of our peers across the nation in focusing on reducing waste, improving processes and always asking ourselves how we can be better. Again, a strong bottom line is critical to our ability to support our clinical care, education and research missions.”
Kaplan cited a number of factors driving the need for greater efficiencies: a growing proportion of patients on government-funded programs such as Medicare and Medicaid, whose payments fall short of costs; greater reluctance by commercial payors to offset those underpayments; and extraordinary growth in the costs of medications and supplies needed for patient care.
“We understand that this kind of change is difficult,” he said. “These are our colleagues and our friends. Our commitment is that we will carry this out with respect, transparency and support. We have some very difficult decisions to make in the short term but are also confident in the long-term benefit for our patients and community of an efficient and stable UW Health.”