Copyright © 2020 Albuquerque Journal
The first month and a half of the COVID-19 pandemic has hit the University of New Mexico with a $50 million negative impact, officials estimate.
Such a toll has left officials bracing for significant financial pressure likely to force painful decisions about instruction, research and health care services, said UNM President Garnett Stokes, who noted that higher education across the country will face similar struggles.
“Moving forward, we’ll be making decisions on and plans for budgets and operations, enrollment, personnel, instruction, research capability, health care services – some of which will likely be painful,” she said in a statement. “However, we are committed to working together to ensure that any revisions to our budget and operations are enacted responsibly and in ways that continue to advance the mission of the university.”
The $50 million is a net loss that includes revenue hits across the university through May 1, and any money the school has so far received to help offset the damages, like coronavirus relief funds from the federal government.
School officials discussed the financial effects the virus has had at the state’s flagship university during two regent committee meetings Tuesday.
On UNM’s main campus, the school lost about $4.5 million because of housing and food services declines and $4.7 million because of canceled events and other services, according to documents presented to regents. That figure includes a deficit from university athletics.
‘A financial disaster’
At UNM Hospital, revenue has declined $49 million, which has been partly offset with $20.2 million in relief money and a $6 million decrease in expenses because the hospital had to cut back on some services, according to the documents.
“Not only is it a medical disaster; in a lot of ways it is a financial disaster,” said Ava Lovell, the senior executive officer for finance and administration at the UNM Health Sciences Center. “I will say, it does look bad in our projections.”
Despite being busy caring for the sick, hospitals have been hit particularly hard because they have had to delay many surgeries and other procedures to save equipment and slow the spread of the virus.
UNM Hospital was no exception.
Some of the documents show that hospital’s net margin through the third quarter of the 2020 fiscal year, which ended in March, was $26.9 million in the black. That margin was entirely wiped out by the pandemic, and the hospital is now projecting to finish the fiscal year $7.9 million in the red.
“In the last two or three days … we have started planning how to open up,” Lovell said. “But it won’t be a vertical line up to recovery.”
Health Science Center academics was $14.2 million in the black at the end of the third quarter and is now forecasting to finish the fiscal year $600,000 in the red, according to meeting documents.
UNM Medical Group, a collection of clinicians in various specialties, many of whom work at the School of Medicine, also was financially struck. The group’s revenue has declined about $17 million, though its expenses have declined $13.6 million.
Much of the Medical Group’s revenue funnels into the academic side of the health system.
Reserves to the rescue
HSC academics has about $53 million in uncommitted reserves that will likely be called on to balance the health system’s budget, Lovell said.
“We will be using some of that to keep us going and keep us from going too much further down,” she said.
There are reasons to be optimistic if the spread of the virus slows.
“Most of this reduction was on the basis of postponing surgeries,” said Dr. Paul Roth, executive vice president and chancellor of UNM Health Sciences. “And keep in mind a lot of this revenue will be made up over the course of the next fiscal year. These are delays. It’s not like the patients have gone away or gone to other hospitals. It’s really, how do we sustain the operation for the next six to eight months?”
And officials with UNM’s main campus and health system said they plan to apply for additional relief money.
“There is hope there will be additional resources,” said Teresa Costantinidis, the senior vice president for finance and administration. “No one knows the extent to which those may be, but we are working to … appeal to the federal government to give us additional funds.”