Over the past several years the UT Health Science Center at Houston has moved forward in its commitment to become one of the preeminent academic health centers in the country.

To achieve preeminent status requires robust programs in research, education and health care, and the space and resources to attract and retain the world’s best scientists, educators and clinicians.

UT Houston leaders have been looking into the future and planning for a variety of eventualities in order to sustain and grow the UT Health Science Center at Houston. Some years that means a growth budget; other years it means some retrenching is necessary. In planning for FY 2009, a slight budget reduction will enable the health science center to cover rapidly increasing utility costs and provide resources required to fund various programs whose success will help propel the university forward.

Facilities

Much progress toward this goal has been made. In 2007 and 2008, opening of the Fayez S. Sarofim Research Building, home to The Brown Foundation Institute of Molecular Medicine for the Advancement of Human Diseases, and the new Medical School Research Facility has increased our space by 376,000 square feet.

In March 2009, the Center for Advanced Brain Imaging Research — a partnership among the School of Health Information Sciences, the UT M. D. Anderson Cancer Center and GE Imaging, will open. And the Biomedical Research and Education Facility/Neurosciences will be added in the near future, along with Dental Branch space. Together these facilities will encompass 708,000 square feet.

The additional research facilities have made it possible to recruit outstanding new faculty to the university and has been instrumental in our ability to leverage the most support ever in NIH funding — a two-year growth of 14 percent and a one-year growth of 5 percent.

Clinical Practice

And, in February, the UT Health Science Center hit a new milestone — the best single month of collections at $10.87 million — increasing the number of patient visits and gross income, on the heels of the record set in January. Additionally, the March numbers for the practice plan are solid, too: $10.5 million in collections, $1.6 million (18 percent) more than March 2007. April 2008 was the fourth straight month above $10 million in collections — $1.12 million (or 12 percent) higher than April 2007. May’s collections were $9.7 million (9 percent) higher than May 2007.

The practice plan is now $9.8 million (13 percent) ahead in collections so far this fiscal year compared to the same time last fiscal year. “It’s affirming to know that our hard work is paying off,” says Andrew Casas, chief operating officer of UT Physicians.

“While a deficit had been projected for this fiscal year,” says Casas, “it’s clear that we can sustain financial stability, and even financial growth, with the increased engagement we’ve had from our physician leaders.

“When asked to improve performance in their areas — including more accurately managing charges and coding — personnel in the charge capture and coding areas truly stepped-up to the plate. They deserve much of the credit for this great accomplishment,” he says. 

“The practice plan’s continued record-setting performance is very encouraging. Because of the terrific work of many very talented people, we’re definitely moving in the right direction and, from all indications, can keep the momentum going,” says Kevin Dillon, executive vice president and chief operating and financial officer of the UT Health Science Center. 

These revenues will be reinvested into building additional clinical strength — additional faculty to care for our patients, additional specialists to treat those with complex illness and injury, and well-trained and compassionate nurses and other health care professionals to provide the best possible care for patients, as well as training for our students and residents.

Looking ahead

This success positions the university to continue to pursue vigorously state and federal support, as well as philanthropic resources to bolster our programs. 

Still, there is much left to do, says Dillon. Although the institution has been very successful in the past seven years in securing legislative support, as well as philanthropy — $240 million secured during New Frontiers Campaign — additional funding is still required to support our education programs throughout the six schools, for student scholarships and graduate stipends, and to support our research arena. 

“This is the second year of the biennium and we will receive very little new money from the state,” explains Kevin Dillon, executive vice president and chief operating and financial officer, “so, in order to pay for a variety of new costs for the coming year we are reducing most operating budgets by one percentage point.”

The UT Health Science Center’s financial "model" suggested that we really needed to cut about 1.75 percent from the upcoming budget, but, says Dillon, “We elected to go with only a 1 percent cut.”

Budgets affected, says Dillon, include most general revenue, designated and auxiliary funds. “Clearly, utility costs and certain software contracts cannot be reduced; nor can we alter special item state funding — such as that for recruiting World's Best Scientists — given their very specific uses.”

The FY08-09 one percent reduction will "raise" about $4 million, which will be used for unfunded costs.

“We've done this before,” Dillon says, “in terms of balancing our budget for new costs — new Medical School Research Space debt service and the Clinical and Translational Science Award annual $2 million ‘match,’ for example. This type of budget reduction is fundamental to how we've improved our financial performance in the past and, in all probability, we will use it again in the future.” 

Dillon says he understands that a budget reduction concerns administrators, faculty and staff, since we had $50 million of "margin" in '07 and record month of Medical Service, Research and Development Plan collections for the first six months of the fiscal year.

“Each year needs to stand on its own, financially,” says Dillon. We need to make at least a modest margin every year, to retain our increasingly important ability to borrow funds for upcoming projects.

The financial success of the Physicians Practice Plan is, of course, very important to the overall health of the institution, Dillon explains. “It's nearly one-third of the whole. It's very visible. And, it’s evaluated closely by UT System.

“It's a risky income source to depend on, though, because income from our clinical practice is much more vulnerable than income, for instance, from our teaching and research mission areas. So, we must be cautious.”

Right now all the financial indicators for the health science center are very positive, however, “caution is warranted in this economic environment,” Dillon says. “Therefore, we are acting on that need for caution in order to insure the ability to continue to achieve or goal of become one of the most successful, most prominent and most impactful health science centers in the world.”      

—Pamela Lewis, Institutional Advancement

Date Posted: 07/08/2008