Auditors say medical system’s finances clean; growth noted

Auditors this week said finances are on the upswing at the University of Arkansas for Medical Sciences and its financial reporting is squeakyclean, in the latest sign of a turnaround at the academic medical center.

The University of Arkansas System board heard a presentation about the completion of an external audit of UAMS at its meeting this week. The review, documents for which were made public Friday, was done by professional services firm KPMG and covered the fiscal year ending June 30.

Reviewers gave an unmodified “clean” opinion in their areas of analysis and found an increase of more than $39 million in the institution’s net position, “a much better outcome than the balanced budget projected for the period,” auditors wrote.

Their findings are evidence of an ongoing reset at UAMS after financial problems, including projections triggering layoffs in 2018 and an internal audit finding improper use of restricted money at the institution’s Myeloma Center, creating a $29 million deficit in the division.

UAMS now is “much healthier,” Chancellor Cam Patterson told the board.

Growth at UAMS was linked by auditors to a roughly $70 million uptick in net patient services revenue, increased pharmacy activity and more grants and contracts. The report and financial statements show UAMS had about $146 million in cash and $280 million in debt, inclusive of bonds, at the end of fiscal 2019.

Operating expenses also grew 1.3% last year, and the health sciences organization will have to be mindful of threats such as no anticipated increase in state appropriations, changes to third-party reimbursement rates or updates to the state’s Medicaid expansion program, auditors said in their report.

“In summary, the economic outlook for UAMS is stable,” analysts wrote. “However, it will require a continuing commitment to improve the performance and cost efficiency of operations, to manage within budget limits, and to carefully evaluate the financial opportunities and risks ahead.”

Trustees heaped praise on UAMS officials for their progress, including trustee and audit and fiscal responsibility committee Chairman C.C. “Cliff” Gibson, who cheered the health sciences center’s “outstanding performance.”

“It takes a lot of commitment [to] budgeting, and maintaining a balanced budget, which is really important these days,” he said.

Patterson and chief financial officer Amanda George hailed the work of clinicians and a reorganized UAMS finance team in executing the recovery. The team is headed by George, whose appointment to her role was announced in February.

The chancellor highlighted the positive margin in spite of several expenses not included in last year’s budget, including a systemwide minimum wage increase from $9 to $14 he called “the right thing to do for our employees.” The change boosted pay for more than 1,500 workers at the state’s largest public employer.

Patterson also underscored a 14% year-over-year increase in federal research dollars allocated to the center, saying those upticks are accelerating. Officials have a “stretch” goal to double such funding over three years.

At Thursday’s meeting, trustees also got an update from UAMS Medical Center chief executive Dr. Steppe Mette, who touted gains in the hospital’s patient experience scores and in observed employee hand-washing.

Cleanliness indicators, which are largely based on environmental services work such as housekeeping of patient rooms, showed some room for improvement, he said.

Those services have lately been contracted out, and UAMS plans to bring them back in-house to spruce up performance.

“It is hard to manage contract employees, is the obvious message there,” Mette said.

In remarks to trustees, Patterson noted Wednesday’s groundbreaking for a threeyear, $156 million project to build a new power plant on the east side of UAMS’ Little Rock campus, among other renovations.

That project, the largest such effort in a decade, was financed through a system revenue bond issue approved by trustees. It’s supposed to address deferred maintenance needs and generate cash through energy savings, officials have said.