The University of Iowa Hospitals system plans to slash $24.8 million from expenses over the next eight months to meet its annual budget.
Hospital officials made the announcement at an Iowa Board of Regents meeting this week at Iowa State University. The nine-person board governs Iowa's public universities.
According to Ken Fisher, chief financial officer at U of I Hospitals, the hospital is 2 percent over budget. Since July 1, hospital expenses have grown by 16.5 percent over last year's costs. Fisher acknowledged that while hospital revenues are up 13 percent from last year, it's not enough to cover costs.
Fisher said the increased costs are due, in part, to the hiring of additional staff to work in expanded units. The hospital has also seen an increase in indigent patients, for whom it doesn't get full reimbursement from Iowa Care, a state program for low-income people without health insurance. The program saw an 11.4 percent increase in enrollment, to 27,000, from June 30 to September 30.
U of I Hospital CEO Ken Kates said the hospital plans to cut $3.1 million in each of the remaining eight months of the fiscal year to meet its budgeted profit margin of 3 percent.
"We're well on our way to identifying the savings," he said. "I'm confident we will be able to achieve the 3 percent margin."
Kates said the system would leave some jobs vacant, reduce hourly positions and cut non-personnel expenses.
The hospital plans to increase its profit margin to 5 percent to pay for new projects, including a new children's hospital and critical care tower. The two capital projects are budgeted at more than $500 million.
U of I Hospitals is a 680-bed hospital in Iowa City with annual operating expenses of more than $860 million.