The UAMS Division of Finance provides management oversight and coordination of core functions including financial accounting, budgeting, treasury operations, revenue cycle, supply chain management, grants accounting, cost accounting and decision support, student accounts and financial aid and contract services.
Supply Chain, not only includes hospital and warehouse supply chain operations but also informatics, contract services, procurement, travel and expense reimbursements and value analysis.
The division employs more than 800 individuals across these operations, all dedicated to providing services effectively and efficiently to UAMS’ patients, students, faculty and staff and the communities UAMS serves across the state of Arkansas.
Resource Optimization (ReOp) Committee
In an effort to maximize UAMS resources, the Finance Division, working closely with members of Team UAMS, formed the Resource Optimization Committee, or Re-Op Committee. This committee is a financial performance improvement committee that identifies and tracks university-wide initiatives that increase revenue or reduce expenses. The Committee is chaired by Amanda George, CPA, MHSA, vice chancellor for Finance & CFO, and has committee representatives from across UAMS that include both faculty and administrative leaders. The goals of the committee are to:
- Increase efficiencies
- Enhance revenue
- Eliminate waste, duplication, and costs
- Standardize processes
Each year during the budget process an overall ReOp target is set. Once the target is established, the ReOp Committee vets a list of potential initiatives to meet the target. Each initiative is assigned an Executive Sponsor, a member of the ReOp Committee, and a Project Lead, who is responsible for setting and executing a strategy to achieve the target. The Project Lead meets periodically with the ReOp Committee Finance Lead and Project Manager to ensure progress is being made. The Project Lead also meets with the Executive Sponsor monthly (or as necessary) to provide updates. The Executive Sponsor provides high-level updates of progress at the monthly ReOp Committee meeting. A monthly scorecard provides a snapshot of how each initiative is performing.
Since it was formed in FY19 the ReOp Committee has identified initiatives that have had a cumulative financial impact of $188.3M. In FY24, 20 initiatives were identified and tracked and had an overall financial impact of $68.6M. The projects with the largest impact were in pharmacy ($21.7M), reduction in overtime and premium pay ($11.3M), workforce productivity ($10.5M), UAMS Health service line initiatives ($9.2M), and supply chain ($6.2M).
For FY25, the ReOp Committee is tracking nine initiatives with a target of $33.6M.
Financing Our Mission Areas
UAMS relies heavily on the margin it generates from the clinical enterprise to cross-subsidize its other mission areas of research and education. Unlike other state supported universities in Arkansas who receive a major portion of funding from the state, UAMS must generate income from its clinical enterprise to subsidize education and research. State appropriation amounts to only 5.7 percent of UAMS’ budget funding. In FY 2024, patient care revenue amounted to 73% of UAMS’ revenue.
UAMS Source of Revenue Fiscal Year 2024
UAMS’ state appropriation has been relatively flat over the last 20 years. In the meantime, expenses have continued to rise, leading to a sharp decline in the percentage of appropriation when compared to expenses.
UAMS Gross State Appropriations and Total Expense FY05-24
(A) Excludes NCI Appropriations & One Time
Figure 1 below depicts an overview of UAMS’ funds flow. Each bucket represents a mission area. For clinical there are two buckets, profitable and
subsidized services. The subsidized services are services that do not make a profit on their own, but UAMS provides for the benefit of the state. The entirety of each bucket represents the total expense for that area and the liquid represents the revenue it generates. For example, while the education mission area generates tuition and contract revenue and receives an allocation for state appropriations, it is not enough to “fill” the bucket. The net loss must be filled by the margin generated from the clinical enterprise.
For FY25, the net budgeted margin from the clinical enterprise, including profitable and subsidized services is $45.7 million or 3%.
If the net margin from the clinical enterprise exceeds the amount needed to subsidize the other mission areas, the overall profit will increase the cash and reserves for UAMS. If the clinical enterprise does not generate enough margin to cover the other areas, the resulting net loss will decrease the cash and reserves for UAMS. The net cash balance is used to make debt service payments and determines what capital expenditures can be made. For large projects, such as building construction, UAMS will finance the project through issuing bonds.
Due to this funds flow model, the primary way for UAMS to grow any of its mission areas is to grow its overall clinical margin. While UAMS continues to drive performance improvement initiatives to increase revenue and decrease expenses, there continues to be significant pressure on clinical margins across the healthcare industry. Because of this, it is unlikely UAMS will be able to increase its clinical margin on its existing services significantly. Rather, the best way for UAMS to generate additional clinical margin is to grow its clinical platform.