2000s

UH Gains Financial Independence

True independence. In the health care industry, being in control of your destiny comes down to leadership and governance; dollars and cents. University Health Care System has successfully navigated these turbulent waters for 200 years.

Instrumental to the organization’s financial picture early in its history was the support of the Women’s Board, founded in 1949 to raise money for hospital and patient expenses. The Women’s Board was renamed the Volunteer Board in 1971 as more men became interested in donating their time to University’s mission to improve the health of those we serve.

Nearly 30 years after the Women’s Board was created, hospital leaders Ed Gillespie and Harry W. Jernigan Jr. founded University Health Care Foundation. The foundation raised funds that made possible initiatives such as Health Central and the Clinical Pastoral Education Program, which provides training for hospital chaplains. The foundation has also helped establish more than 100 endowments, supporting myriad education initiatives and upgrades in medical facilities and equipment for University Hospital.

With health care costs skyrocketing in the new millennium, only one commercial insurance company offered University Hospital a quote for malpractice and general liability insurance, which had exploded in premium costs from about $300,000 in 2001 to $1.8 million in 2002.

Rather than accept these costs, which would have rippled across the entire organization, “we decided to do something positive about it,” said Randy Smith, M.D., a plastic surgeon who served as board chairman. University capitalized its own reinsurance company, and in so doing, University joined many of its health care peers and was able to find less expensive premiums through the wholesale insurance market.

Smith also worked with his colleagues to shift the employee retirement plan from a Defined Benefit Pension Plan to a 401(k) (later transferred to a 403(b)), and in 2003, University began reinvesting in equities to strengthen its financial stability.

This stability is largely a result of controlling costs, and during the tenure of CEO and President Jim Davis, the hospital has been able to lower its costs by about 15 percent. Meanwhile, University delivered $34 million in uncompensated care in 2015, all while generating nearly $1 billion in revenue for the local economy.

“I’ve recently told folks that the 200-year history doesn’t guarantee a five-year future,” said Davis. “My job is to try to be looking at the future, and trying to figure out how do we position this facility, so they can continue to give great care, and that it’s financially stable going into the future.”

“We get awfully caught up in all the metrics and all the financials,” he said. “Being a CEO of a hospital is a privilege. It truly is a privilege. I think it is one of those noble things you can do in life: try to help other people when they’re sick.”

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