VCU’s MCV Hospitals Authority board approves budget cuts

By Pamela DiSalvo Lepley

The board of Virginia Commonwealth University’s Medical College of Virginia Hospitals Authority today (Oct. 19) approved a reduction in the hospital’s base operating budget of about $9 million. The expense reductions include the elimination of 106 vacant positions and 43 filled positions, as well as non-personnel reductions.

Even with these changes, the hospital is projecting a $5.3 million operating loss during its 1999-2000 fiscal year.

Carl R. Fischer, chief executive officer of MCV Hospitals, indicated that these reductions were necessary to maintain the financial viability of the hospital, to ensure the continuance of essential health services to the community and the commonwealth, and to continue the support of the education and research mission of VCU’s School of Medicine.

Fischer cited several reasons for the losses that include Managed Care contracts, which have not recognized the costs associated with providing specialty services at MCV Hospitals and federal reductions in Medicare reimbursements resulting from the 1998-2002 Balanced Budget Act. These factors, coupled with unreimbursed indigent care, necessitated the expense reductions.

Donna Katen-Bahensky, MCV Hospitals chief operating officer, noted that the reductions were difficult to make with the hospital’s costs already among the lowest of its peer teaching hospitals. She explained the expense cuts were carefully planned to avoid any reduction in services and to ensure continuation of quality patient care.

According to board chairman, Eugene P. Trani, Ph.D., the board will carefully monitor the hospital’s finances over the next several months. He noted that the U.S. Congress is considering several bills which would restore some of the Medicare reimbursement cuts. Dr. Trani also indicated that a top priority of the Authority board is to obtain increased funding for indigent care from the commonwealth. VCU will request $47 million for the next biennium from this year’s General Assembly.