UNM Health Sciences Center ends fiscal year with $36M surplus - Albuquerque Journal

UNM Health Sciences Center ends fiscal year with $36M surplus

Copyright © 2020 Albuquerque Journal

University of New Mexico main campus faculty members said during public comment at a regents meeting Thursday that their colleagues are worried about losing their jobs and are looking elsewhere for employment.

Some regents questioned whether the university could afford to support its athletics department at its current size.

Meanwhile, the UNM Health Sciences Center had a $36 million surplus in the 2020 fiscal year, which HSC officials said will go in part to employee raises.

Presentations at a special regents meeting Thursday showed the stark difference in the financial state of UNM’s main campus and its health system.

A report presented to regents on HSC’s 2020 fiscal year showed the university’s health system finished the year with a $36 million positive margin.

That margin doesn’t include the $73 million set aside for future capital projects, including the first phase of a massive plan to build a new tower, according to the financial report.

“The hospital funds are not fungible. They are very much restricted for hospital operations,” said Ava Lovell, the hospital’s senior executive officer for finance and administration.

Dr. Michael Richards, the interim executive vice president for the HSC, said many things factored into the hospital’s bottom line for the fiscal year. There were millions in state support for the hospital tower project. An “operational initiative” at the hospital and new programs with the state around managing Medicaid increased the HSC’s revenue, Richards said.

The hospital also ramped up some of its services during the pandemic, he said.

“It’s really the confluence of all those things that get us to this unique financial position,” he said during the meeting. “Our financial position is strong … but it is largely driven by work that we had in place and underway before the unexpected COVID event.”

Both the HSC’s academic enterprise and UNM Hospital finished the fiscal year with positive margins. The hospital’s revenue for the 2020 fiscal year, $1.34 billion, was $72 million more than budgeted, and $137 million more than the 2019 fiscal year.

The revenue from last year included $20 million from the federal government as part of the Coronavirus Aid, Relief and Economic Security Act, according to budget documents.

“The CARES Act funding is to cover health care-related expenses and lost revenue attributable to COVID-19,” Mark Rudi, a hospital spokesman, said in an email. “During the months of March, April, May and June, UNMH experienced significant lost revenues with reduced services related to scheduled procedures as directed by the state public health orders … As well, UNMH continues to experience an increase in costs due to higher cost of supplies and PPE and contract labor to ensure coverage of our clinical units.”

Lovell said during the meeting that the hospital has to keep some of its surplus in its accounts to borrow money for capital projects, and as part of a lease agreement with Bernalillo County. She said the hospital also plans to use the positive margin to “do some restructuring of compensation and salary” among HSC employees.

“We’ve gotten behind the market the last five to eight years,” she said.

Meanwhile, across the street from the health system, officials said the financial situation is dire.

Regents approved making five changes to the school’s research and public project requests. The changes totaled about $4 million. Those requests are separate from the money the university gets from the state each year for instruction and general expenses.

The regents were especially split on one change: another $1 million to the athletics department. The department is expecting a significant loss in revenue this year because of the pandemic.

The regents who opposed said the request would send the wrong message to the rest of the university. UNM officials have said the COVID-19 pandemic has forced the university to cut its operating budget by millions, which could eventually lead to cuts to academic programs. The university is offering incentives for employees to retire and keeping some positions vacant in an effort to save money.

“I would change the request to an urgent and immediate need in academics for a million dollars,” said Regent Rob Schwartz. “I think we are sending a message by seeking a million for athletics.”

Schwartz said the main campus is “hemorrhaging faculty” and that morale is low.

Regents ultimately voted 4-2 to request an additional $1 million for the athletics department, which ended the fiscal year with a $3.6 million shortfall. Schwartz and Melissa Henry, the student regent, voted against the proposal.

Regents Sandra Begay, Doug Brown, Marron Lee and Kim Sanchez-Rael voted in support of the request. They said the athletics department was uniquely devastated by the pandemic.

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