Loss at University Medical Center shrinks sharply

A bureaucratic mechanism to tap more federal money helped reduce the operating loss at University Medical Center of Southern Nevada to the lowest level in seven years.

According to the 2012 audit formally presented to the Clark County Board of Commissioners on Monday, the loss shrank to $18.8 million during the year ended June 30 from $94.5 million the previous year. The county-owned UMC has not shown an operating surplus in more than a decade, and has lost at least $34 million per year since 2006.

Propelling the improvement was participation in the Upper Payment Limit program, intended to bridge the gap between payments for Medicare patients and the much lower levels provided under Medicaid. Through a complex process, the county sent the subsidies it regularly puts into UMC to the state, which then landed matching grants from the federal government.

As a result, UMC’s revenues rose 18.3 percent to $555.4 million in 2012, with $71.8 million of the $85.9 million gain coming through the program. At the same time, the county’s subsidy dropped by more than half, to $32.5 million.

“That’s what happens when you get paid for what you are doing,” UMC CEO Brian Brannman said. “This gives us a little bit of breathing space and we are hoping we can reapply the money to some of our internal needs.”

He has a $13 million shopping list for equipment, such as electrocardiogram machines, that he considers overdue for replacement. Hospital management also keeps a big-ticket roster of projects, including refurbishing the trauma center and the nursing stations and converting more shared patient rooms to private ones.

Private rooms are the norm at private hospitals built in the past two decades in the outlying areas of Las Vegas and are preferred by people with private insurance and the ability to cover co-payments. Private insurance generally pays a higher percentage of the bills than Medicare and Medicaid, but patients covered by it have dropped from 22 percent of UMC’s mix in 2010 to 18 percent last year.

By contrast, the countywide average for private insurance ran 27 percent for the first nine months of 2012.

Despite the better financial news, UMC’s financial future is far from secure. Federal policymakers have raised the possibility that the Upper Payment Limit will be phased out in the next few years as part of the massive realignment coming with the Affordable Care Act.

Because of competition and a local unemployment rate still running in double-digit percentages, the number of people admitted to the hospital and seen as outpatients and the number of days the beds were filled all declined last year, continuing the trend of the recent past. Brannman added that as the unemployed have started to exhaust COBRA extensions of insurance they had while they had jobs, demand for treatment has contracted.