CFO: University of Iowa hospitals doing better than most post-COVID

One year out from imposing a massive pause on elective procedures and unprecedented restrictions on clinic visits — while in the throes of an accelerating COVID-19 pandemic — University of Iowa Health Care on Wednesday reported it’s doing better than most hospitals nationally.

Using Moody’s Financial Metrics, UIHC as of February was reporting a 4.1 percent operating margin — compared with the national average of 1.1 percent. Typically, that national figure is over 4 percent, as it was even in November.

“This has dropped significantly for institutions across the country,” UIHC Chief Financial Officer Bradley Haws told the Board of Regents during its meeting on Wednesday. “Moody's specifically cites — and this is just math — expenses growing faster than revenues.”

Federal funding and one-time aid for many institutions hasn’t been able to entirely offset the seesaw in expenses versus revenues.

It has at UIHC, though. UIHC, while reporting year-to-date expenses nearly $23 million over patient revenue, has managed to cover that deficit with $32.4 million in one-time federal coronavirus aid.

“So we feel very good that our operating margin at 4.1 percent has stayed fairly consistent,” Haws said. “That has largely been supported by external funding, one-time funding, that will not continue past the pandemic. But at least in this reporting cycle we feel very good about that.”

Had the pandemic not halted or nearly halted many of UIHC’s operations for two months last year, modeling shared with the Board of Regents on Tuesday shows the clinical, surgical, inpatient, and emergency department demand and capacity challenges would been even worse than they’ve become.

“If it weren't for two months of shutdown in 2020, we would have set all-time records across everything for volumes,” UI Hospitals and Clinics CEO Suresh Gunasekaran told the regents. “And so in 2021 we anticipate that we will continue to see pretty significant demand.”

UIHC had sought to alleviate some of the pressure on its main campus by spending $230 million to erect a new 300,000-square-foot 36-bed hospital in North Liberty — including an additional emergency room.

But pushback from community health care providers convinced the State Health Facilities Council in February to reject UIHC’s application for a certificate of need, in part because the university hadn’t proven efforts to first collaborate across the Corridor.

UIHC officials haven’t announced next steps or revised plans for the North Liberty land. And Gunasekaran didn’t mention it during Wednesday’s regents meeting. But he did promise “significant discussions about our need to continue to expand our capacity so we can serve the Iowans that want to be seen at UIHC.”

In the meantime, Gunasekaran said UIHC will work to “explore partnerships with those in the community” and use existing resources efficiently.

“We have a healthy appetite to improve efficiency,” he said. “And we want the board to understand that we will continue to do everything within our power to continue to drive growth, even with the real estate constraints that we have today — even with the space constraints that we have.”

The university’s inpatient census — which has been on an incline for years, reaching an average of nearly 97 percent capacity in the 2019 calendar year — dipped in the pandemic-plagued 2020 to 93 percent, the lowest it’s been in at least five years.

Its surgical volume dropped below 2017 levels, and its total emergency department visits dipped well below 2016 levels — although the severity of those patients remains high, sustaining UIHC’s capacity challenges, according to Gunasekaran.

The average number of patients waiting for a bed in the emergency room in 2020 was 27, down only two from 2019 and 2018.

“This is the number of patients every night in our emergency room that are waiting for beds,” Gunasekaran said. “For those keeping score at home, we would need 30 beds just to make sure that everyone that comes into the emergency room can get in a bed guaranteed on the same night.

“When you take a look at what's going on here, our capacity needs are extremely significant,” Gunasekaran said.

Expenses up

While revenue this fiscal year to date is nearly 3 percent above budget — despite the pandemic and including federal COVID aid — both salary and non-salary expenses are even further above budget, at 5 percent and 6 percent, respectively.

Some of those costs have gone toward vaccinating not just employees but members of the community.

“We are not Hy-Vee,” Gunasekaran said. “We really used analytics to get the oldest patients, those with disabilities, those with preexisting health care conditions, those complex patients that maybe you don't want having a vaccine in the middle of a grocery store, you want them in a health care environment. We had crash carts, we had emergency personnel in case anyone had any side effects.”

Thankfully, he said, none of that was needed.

“But we did have some folks that were very anxious and very nervous, and having health care personnel around was actually very, very helpful,” he said. “I would actually say the number of people that had anxiety and concern were in the hundreds. So we were very happy to be in a health care location and to be able to make folks feel better about those things.”

To date, UIHC has given nearly 14,700 of its employees at least one dose of vaccine — and more than 12,800 have received both a first and second dose. It didn’t immediately have numbers of doses administered to the community.

But Gunasekaran said the effort has required considerable resources.

“The expense of doing this COVID-vaccination program has been rather significant, as we have pulled significant numbers of staff away from operations in order to be able to do this,” he said.

“But if we ever had to do it over again, of course we’d do it,” he said “And, of course, we’d spend the money and we’d incur the expense because the value to the community is so significant.”

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com