UMC projecting ‘significant’ loss after years of recovery

Public hospital trying to entice employees to take early retirement

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University Medical Center's main entrance. (UMC photo)

University Medical Center of Southern Nevada, the county-run hospital that has taken a leading role in Southern Nevada’s coronavirus response, now faces “historical financial pressures” as a result of an overall decline in patients, postponed surgeries and increased costs.

The public hospital, which has spent the last five years recovering from past financial upheavals, saw costs increase 25 percent and revenues decline 50 percent since mid-March as much of the state shut down and the hospital made room in case of an influx of COVID-19 cases, said CEO Mason VanHouweling.

The coronavirus response led hospitals statewide to delay elective procedures and encourage Nevadans to stay home, which decreased everything from trauma patient numbers to primary and Quick Care visits at UMC. The fall in patient numbers came just as UMC and other hospitals were fighting to obtain increasingly costly personal protective equipment. Local hospitals resumed elective procedures last month.

“We are facing new historical financial pressures just not only at UMC but really every hospital in Las Vegas, in the state and around the country,” VanHouweling said.

The shutdown also resulted in a shortfall of tax revenue, leading to state and county budget cuts. The county’s approved budget includes cuts to UMC, which projects a $200 million worst-case-scenario shortfall going into FY21, VanHouweling said.

The county slashed $16 million from the $31 million annual subsidy typically allocated to UMC, but the hospital received $16 million in federal CARES Act funding recently, which will help to offset that loss. UMC has so far been awarded $32.4 million in CARES Act funds and is working with the county finance team to aim for an additional share of those federal dollars.

“We’re projecting a significant loss, a historic loss really at UMC, but depending on how these CARE dollars, these federal dollars, are coming in, we didn’t have that clarity of how those dollars would flow from the federal down to the county,” VanHouweling said. “We anticipate being better than the $200 million (shortfall).”

The hospital is also hoping to save money through voluntary separation program approved by the Clark County Board of Commissioners at their May 19 meeting. 

Through the voluntary separation program, employees with five or more years of service with the county or UMC who are eligible for retirement will receive one week of compensation for every two years served, up to 15 weeks of compensation, as well as 2 years of health benefits. About 150 of UMC’s roughly 3,500 full-time employees — or 4.3 percent — have so far volunteered to participate in the program, which is open through the end of the month. VanHouweling said he expects those employees’ agreements to be approved. 

County Commissioner Lawrence Weekly, chair of the UMC Board of Trustees, said the hospital had hoped to do capital improvement projects and modernize its facilities, but now it will have to redirect its dollars and focus to other areas.

“We’re just going to have to do some things differently as it relates to early retirement for those folks who are right there. We’re going to have to be creative,” he said.

The county and hospital may also have to look into “sweetening the pot” to entice eligible employees to take advantage of early retirement, he said.

As the state reopens, much of what the future holds for the hospital remains up in the air. In addition to closely watching any potential CARES Act funding opportunities, the hospital is also monitoring its patient levels.

The facility is starting to see increases in primary care patients, Quick Care visits and surgeries as the state’s economy reopens, though there still seems to be hesitancy on the part of members of the public to visit their doctors and hospitals, VanHouweling said.

Just last year, the hospital was in the midst of expansion discussions as it looked to add new clinics in Southern Nevada.

“We were kind of cheering … earlier in the year,” Weekly said, “and this unforeseen pandemic came upon us and it’s caused a financial setback for us.”

Pashtana Usufzy
Pashtana Usufzy is a freelance general features and health reporter based in Las Vegas. She previously worked as a health care reporter at the Las Vegas Review-Journal and prior to that as a local news reporter at the Las Vegas Sun.