IOWA CITY — The University of Iowa Hospitals and Clinic will increase rates by 6 percent in the next budget year after the Board of Regents approved the price bump Wednesday during its monthly meeting.
But, UIHC officials said, only a small percentage of patients will see that increase in their healthcare bills — such as “self-pay” patients. The rate increase primarily is needed to offset some of the UIHC’s contracts that assume there will be a rate increase annually and adjust their costs based on that assumption, said Ken Fisher, associate vice president for finance of UI Health Care.
“If we don’t increase our rates, we lower our net revenue,” Fisher told the board.
According to regent documents, the UIHC does a detailed review of all charge items to determine its proposed rate increase.
This year’s proposed increase was driven by where the hospital’s rates sit in comparison with peer hospital charges and limits on charge increases that exist in some of its contracts.
“The University of Iowa Hospitals and Clinics’ charges are currently relatively low compared to our peers,” according to regent documents.
But many commercial payers limit annual facility charge increases to no more than 6 percent.
“Given the UIHC’s low charge levels, it would be reasonable to increase charges more than 6 percent,” according to regent documents. “However, given the cap on charge increases in many of our contracts, we feel it is most prudent to cap the increase proposal to 6 percent.”
Regents also on Wednesday approved the hospital’s Fiscal Year 2015 budget, which includes an expected 3 percent operating margin for the hospital next year and is based on about $1.2 billion in revenues.
The UIHC expects to fund $249.5 million in capital projects and routine equipment including $95 million for the new children’s hospital and $7.5 million on a fifth-floor expansion to its Iowa River Landing clinic.
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