University Hospital, Newark, New Jersey

Transcription

1 University Hospital, Newark, New Jersey FY 2016 Operating Budget Adopted June 29, 2015

2 1 Overview of the Process to Develop the FY2016 Budget for UH University Hospital finance personnel, in consultation with the Barnabas Health team, have prepared the proposed FY 2016 budget that is presented in this document. In May 2015, a preliminary draft budget for each department was distributed to UH department heads. Finance and Operations then met with each department head to review the draft budgets and to identify additional revenue enhancement and expense reduction initiatives. Finance and Operations then agreed on the appropriate budget changes, if any, for each department, and UH executives and department heads then signed off on the revised budgets. The resulting proposed FY 2016 budget presented in this document is evidence based. Accordingly, the anticipated future impact of performance improvement initiatives that have been identified but that are still being implemented and have not yet yielded financial results are not included in the proposed base budget for FY Three performance improvement initiatives have been implemented and are expected to yield $2.7 million in FY 2016, as shown in the FY 2016 statement of revenues and expenses. In addition to these three initiatives, many other performance improvement initiatives have been identified and are being worked on by management, and may yield results in FY 2016.

3 2 FY 2016 Revenue Budget Assumptions Inpatient volumes are projected to remain unchanged from the FY 2015 year-end projection. Outpatient volumes are anticipated to remain at the same levels as in the FY 2015 projection, except for the observation unit, which is being expanded. Case mix, patient type, and payer mix ratios are also anticipated to remain consistent with those experienced in FY A 4% increase in charges is proposed to be implemented July 1, 2015, which will enable UH s charges to remain in the 75th to 80th percentile of NJ s Major Teaching Hospitals, and which will increase net revenues by $1.5 million. An increase of approximately 1% is forecasted for payment rates from governmental and non-governmental payers, which will increase UH s net revenue in FY 2016 by $2.1 million. The state has decreased UH s Charity Care subsidy by $22.8 million in FY 2016, and has increased payments to UH for Medicaid-funded Graduate Medical Education by $3.1 million in FY Meaningful use incentive payments, which were $3.8 million in F 2015,are forecasted to be on target to receive the full potential reimbursement of $1.8 million in FY 2016, which is decrease of $2.0 million in FY It is assumed that UH will receive $3.9 million in FY 2016, as a result of the Community Benefit impact for Wage Index reclassification, which is a $1.0 million increase from the level in FY 2015.

4 3 FY 2016 Expense Budget Assumptions The proposed FY 2016 budget includes a provision for nominal salary increases in FY The proposed budget for FY 2016 assumes that the BANs will be re-financed before January 1, 2016, assumes that no principal payments will become due in FY 2016, and assumes that interest-only payments on University Hospital s debt will remain the same level in FY 2016 as in FY Depreciation expense (a non-cash expense) is budgeted to be $21.0 million in FY 2016, so UH is forecasted to have positive cash from operations of $11.2 million in FY 2016.

5 Proposed FY 2016 Operating Budget FY 2015 Budget FY 2015 Forecast FY 2016 Proposed Budget Net Patient Revenue $ 324,251,000 $ 375,955,865 $ 381,079,688 Charity Care and HRSF Subsidy 90,281,000 $ 90,507,885 67,756,346 Total Net Patient Service Revenue 414,532, ,463, ,836,034 Other Income Fringe Benefits Reimbursement 92,932,000 $ 92,350,000 92,350,000 State Appropriation 43,821,000 43,841,000 43,841,000 Miscellaneous Income 14,682,000 16,212,399 15,521,778 Total Other Income 151,435, ,403, ,712,778 Total Revenue 565,967, ,867, ,548,812 Expense Salaries & Wages 217,169, ,945, ,708,318 Contracted MDs 55,048,000 54,998,700 55,026,984 Contracted Residents 17,865,000 18,084,002 18,445,682 Fringe Benefits 92,932,000 95,350,000 95,150,000 Supplies and Others 150,438, ,808, ,575,094 Interest Expense 7,715,000 11,417,015 11,596,015 Facilities Service Agreements 23,291,000 18,652,816 18,559,332 Depreciation 18,500,000 18,491,260 21,000,000 Total Expense 582,958, ,747, ,061,426 Net Gain (Loss) from Operations Without Performance Improvement Initiatives $ (16,991,000) $ (12,512,614) Expected Yield from Implemented FY 2016 Performance Improvement Initiatives** Net Gain (Loss) from Operations With Performance Improvement Initiatives 2,700,000 $ (16,991,000) $ 5,119,719 $ (9,812,614) ** In addition to these implemented initiatives, UH personnel are working to plan, review, approve, and implement additional performance improvement initiatives that may yield in FY 2016 and improve the Net Gain (Loss) from Operations for University Hospital in FY

6 5 Forecasted Cash Flow for FY 2016 Assuming Refinancing of BANs and No Increase in State Funding Cash Flows from Operating Activities FY 2016 Proposed Budget Excess of Revenues of Expenses ("Change in Net Assets") (9,812,614) Adjustments to reconcile change in net assets to cash provided by operating activities: Add back depreciation and amortization 21,000,000 Increase (decrease) in cash resulting from a change in: Decrease in accounts receivable - Increase (decrease) in accounts payable and accrued expenses (13,569,840) Net cash gain (loss) from operating activities * 7,430,160 Cash flows from investing activities: Deduct capital expenditures IS&T capital expenditures (4,644,664) Emergency replacement and other capital expenditures (6,000,000) Net cash used in investing activities (10,644,664) Cash flows from financing activities Add funds reimbursed from the BANs for capital investments paid for by UH Net cash (used in) provided by financing activities Net (decrease) increase in cash and equivalents in this period Cash and cash equivalents, beginning of period before payments to Ruters Cash and cash equivalents, end of period 6,688,611 6,688,611 $ (6,338,507) $ 105,791,929 $ 99,453,421 Days of cash on hand at beginning of period before payments to Rutgers 65.1 Days of cash on hand at beginning of period after payments to Rutgers Days of cash on hand at end of period