FARMINGTON, Conn. — A report released Friday outlines ways that UConn Health my become profitable and says the challenges faced by the institution can be blamed on its size and employee benefit cost.
The report, commissioned by the Lamont Administration, provides an overview of different strategies and models for UConn Health to "achieve a larger scale and greater financial stability" according to officials. It was authored by the healthcare investment consulting firm, Cain Brothers.
The report said the operation was running an average of $140 million annually. "UConn Health’s Patient Care Enterprise is subscale, unprofitable and unable to financially support the academic mission nor fund recruiting or research for the medical school. Financial support from the State has been necessary to fund both the academic mission as well as losses from the Patient Care Enterprise," said the report.
One quarter of the patient care is provided to Medicaid recipients and the uninsured, similar to other health systems in the state.
"UConn Health’s Patient Care Enterprise has market-leading patient experience and quality-of-care metrics," said the report. "It has also shown impressive growth for the last few years, taking market share from local private-sector competitors. Despite this recent growth, UConn Health’s Patient Care Enterprise remains one of the smallest academic medical centers in the nation. While recent growth has been positive, organic growth will not be enough to achieve necessary scale nor overcome market consolidation that is happening both nationally and across the state."
Due to its smaller size, UConn lacks negotiating leverage and operational costs are spread over a much smaller base, said the report. "The largest reason for the lack of profitability is UConn Health’s employee benefit cost which are materially higher than the rest of the marketplace. Margins for the hospital industry are not large enough to pay for the current fringe benefit cost load."
Gov. Ned Lamont said in a statement, "The research provided in this report provides a foundation for everyone at the table – including the UConn Health Board of Directors, the UConn Board of Trustees, the Comptroller’s Office, President Maric’s office, my administration, and others – to work together on solutions that will assist UConn Health in thriving for the next generation.”
"We are still reviewing the report but agree with the key theme: UConn Health’s achievements in quality of care, medical and dental education, research, and growth for the people of Connecticut are impressive, but the next phase of excellence requires UConn Health’s clinical enterprise to broaden its scale and explore strategic initiatives to seek greater financial independence. We will be studying the report carefully as we engage in our planning this year,” Dr. Andrew Agwunobi, CEO of UConn Health, said.
Read the Final report from Cain Brothers on UConn Health here.
Doug Stewart is a Senior Digital Content Producer at FOX61 News. He can be reached at dstewart@fox61.com.
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