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University of Iowa Hospitals and Clinics sees best budget year in history

'It was, in a word, an outstanding year'

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IOWA CITY — The University of Iowa Hospitals and Clinics, in the budget year that just ended, saw its highest revenue totals in history – reaching $1.45 billion, or 3.5 percent above budget and nearly 11 percent above last year.

“When you look at that kind of growth in a stable organization, that’s very impressive,” Ken Fisher, associate vice president of finance for UI Health Care, told the Board of Regents on Thursday.

The UIHC operating income for the 2016 budget year that ended June 30 reached nearly $100 million – 103 percent above budget and 19 percent above last year. Those spikes were driven by large increases in patient volume, especially The hospital saw a 21 percent increase in that category – although nearly all volume indicators rose, including discharges at 5.2 percent, average daily census at 5.9 percent, and total clinic visits at 5.9 percent.

“It was, in a word, an outstanding year,” Fisher said.

In the first month of the new budget year, UIHC brought in nearly $121 million in revenue, which is 3.1 percent above last year but 4.7 percent below budget. Fisher, however, said the hospital in August broke records.

“The month of August, from a perspective of volume and revenue, absolutely set new record highs in gross revenue,” Fisher said. “It’s $366 million in gross revenue, which is greater than 16 percent above last year.”

When asked whether UIHC’s financial report will look as strong at the end of the current budget year, Fisher conceded the new $360 million UI Stead Family Children’s Hospital is scheduled to come online in December.

“There is an incremental add of about $30 million in new costs,” he said. “That adds almost $800,000 of cost per month … plus we have 500,000 square feet of utilities that we are going to have to pay for … so it is a lot of cost.”

Fisher said the hospital expects it will serve more pediatric patients over time, but the hospital might not see an immediate spike in the children’s area.

“It will be a hard year,” he said. “Because we have a lot of fixed cost that’s added and not a lot of room to grow.”

But Ken Kates, chief executive officer for the UI Hospitals and Clinics, said the enterprise has been planning for the added costs and feels prepared for the adjustment.

“We’ve, of course, known about the incremental cost associated with the new children’s hospital for years, and over the last three years have been working on what we called the $100 million plan – to work together as one enterprise in identifying $100 million in incremental revenue,” Kates said.

Through the first two years of the plan, Kates said, the hospitals achieved 60 percent of the goal.

“So we’re confident we’re moving in the right direction,” he said.

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