University of Iowa Health Care needs millions to dissolve alliance

(FILE PHOTO) A Board of Regents meeting at the Iowa Memorial Union in Iowa City on Wednesday, Sep. 6, 2017. (Stephen Mal
(FILE PHOTO) A Board of Regents meeting at the Iowa Memorial Union in Iowa City on Wednesday, Sep. 6, 2017. (Stephen Mally/The Gazette)

After committing tens of millions of dollars years ago to craft a network of health care providers capable of pooling abilities and knowledge aimed at better-coordinated care, University of Iowa Health Care on Wednesday told the Board of Regents it needs to spend millions more to discontinue the partnership.

UI Health Care in March announced it’s exiting the UI Health Alliance, established in 2012 with regional partners, and dissolving that group’s accountable care organization, launched in 2015.

This week it said it needs $7.5 million “to meet cash flow requirements to facilitate discontinuance.”

According to a statement provided to The Gazette, “The ultimate cost of closeout is expected to be less after final dissolution."

UI Health Care — a $1.4 billion system that opened the budget year with a $7.2 million deficit — is seeking Regents approval to transfer $9.5 million to its separate nonprofit UI Health System organization, which manages the alliance, primarily for the dissolution.

“Capital commitments to the alliance must be met by all members for it to accommodate closeout expenses, including multiyear contractual commitments with third parties engaged by the alliance and direct personnel support,” according to the UIHC statement.

The University of Iowa established the UI Health System in 1994 as a separate, nonprofit formed to support clinical, academic and research programs in the UI Carver College of Medicine, UI Hospitals and Clinics, and UI Physicians — collectively known as UI Health Care.

UI Health System oversaw the alliance, which included partners MercyCare Service Corp., Genesis Health System and Great River Health Systems.

That collaboration’s accountable care organization was formed to allow the partners to contract together on coordinated patient care. But earlier this year the university announced plans to dissolve it, citing industry and budgetary uncertainty.

“Given a rapidly changing health care environment, reductions in federal and state reimbursements, uncertain financial headwinds and looming cuts in state appropriations to the University of Iowa, continuing to participate in the Alliance and its ACO would become increasingly difficult,” according to a message at the time from UI Health Care administrators.

If the Board of Regents approves the $9.5 million transfer Thursday, it wouldn’t be the first time it has authorized sending millions from UI Health Care to its separate UI Health System. The board OK’d a nearly $19 million transfer in 1995 and another $12 million transfer in 1999 “for the continued development of network activities.”

In October 2014, shortly before establishing the accountable care organization, the board authorized a $30 million transfer to the UI Health System. The university said at that time the alliance was developing a “clinically integrated network capable of pooling their collective abilities and knowledge.”

In addition to cash-flow needs to dissolve the UI Health Alliance, UIHC officials on Wednesday said they need $2 million to cover “residual cash flows of UI Community Connect projects.” Those included installing clinical information systems at community hospitals.

Board of Regents auditors reported this week UI Health Care has been slow to respond to critical findings related to several operations. Those include Community Connect, which was created under the UI Health Service umbrella to bring information technology to other Iowa health care providers.

At the time of an internal audit of Community Connect last summer, it had 50 full-time staffers and was contracting with seven critical access hospitals or clinics to implement electronic medical records and planning systems.

The audit found insufficient controls over patient data, inaccurate patient scheduling and billing, inefficient processes, insufficient financial reporting, and unpaid staff bonuses, among other items.

Nearly a year later, auditors this week reported the university had failed to follow through on planned corrective action within six months of the originally scheduled date.

Patrice Sayre, chief audit executive for the board, told Regents Wednesday she’s learned the Community Connect file “actually is in the process of being closed.”

“We really thank management and the university for working with us to remedy these issues,” she said.

Sayre did not disclose specifics about how the university had resolved auditor concerns.

In a statement provided to The Gazette, UI Health Care said its information systems unit now will be responsible for handing the Community Connect work. Officials did not immediately answer questions about the status of the 50 employees reported on staff with the program last year.

The university has been trimming its workforce in response to below-budget income last year and this year’s initial deficit. As part of an $86 million saving initiative that has targeted a reduction of the equivalent of 500 full-time employees, hospitals officials on Wednesday reported achieving 479.3 of that goal — through attrition and layoffs.

Through April, the hospital had realized $50.7 million in savings. It’s now reporting net revenue 2.1 percent above budget.

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