University of Michigan Health System (UMHS) Funds Flow Overview

Transcription

1 University of Michigan Health System (UMHS) Funds Flow Overview Prepared by: Andy Zukowski, Senior Finance Executive UMHHC, UMHS Finance December

2 UMHS Funds Flow Model Goals Current State Simplify and Standardize funds flow transaction administration Ongoing communication to facilitate understanding of new funds flow model and rules Remain flexible to be responsive to changes in the internal and external environments Support the interdependent components of our financial capacity and the tripartite mission 2

3 UMHS Funds Flow Overview Medical School (MS) Dean/ FGP $ UM Central Campus Health System Depts $ $ Hospitals and Health Centers (HHC) Funds Flows between Campus & UMHS: Mission/academic support Activity-based pass through (University Business Model) Payments for services and overhead Funds Flows between MS & HHC: Equity Payments for services UMHS shared services Strategic investments Funds Flows within the Medical School: Academic activity/base allocations Clinical activity-based (WRVU Model) Payments for overhead & capital Commitments 3

4 HHC & MS Funds Flow Models Equity Transfers Academic Support Payment Ambulatory Care Margin Share Limited Remaining Local Arrangements Revenue Reimbursement (ex: Primary Care RVUs) Operating Payments for Services Shared Administrative Operating Expenses Other Service Coverage (ex: Radiology night coverage, Hospitalists) Split Administrative Expense & Provider Support (ex: Department Administrators) Medical Director Pay Graduate Medical Education Shared Services Expense (ex: Communications, Revenue Cycle, EVPMA, etc.) Shared Space Arrangements (ex: use of internal rent model and/or depr. allocation) Select Strategic Investments 4

5 Funds Flow Implementation Framework Funds Flow Mechanism HHC Medical School Models Intended Uses Administrative Oversight Academic Support Payment Ambulatory Care Margin Share Investment and support of the academic mission Includes: academic program support, faculty recruitment and retention, chair recruitment and retention, capital investments, one-time commitments, etc. Ambulatory Care Unit incentives Funding the WRVU model Supplemental Clinical faculty recruitment & retention Clinical quality, safety and customer service initiatives MS Dean FGP Payments for Services Service Coverage, Medical Directors, etc. Shared Services Dean/FGP Department Models Services under direction of an integrated UMHS leader whose services support all UMHS divisions. MS CAO, MS FGP Exec. Dir. & HHC COO EVMPA, MS Dean & HHC CEO WRVU Model Activity-based clinical productivity payments to support faculty effort FGP Fund Allocation Model Dean s Commitments & MS Investment process Activity-based flow for research IDC effort & overhead Activity-based flow for tuition/education mission effort Activity-based charge for cost of space & capital recovery Base allocations & select supplements Faculty/Chair recruitment & retention Research Center/Program support Facilities Renovations, Research/Education Equipment Purchases New/expanded operating units (Academic or overhead support) MS Dean MS Dean North Campus Research Center (NCRC) Tax HHC Internal Models NCRC capital renovations and safe mode operations 5 MS Dean/Exec. Director NCRC HHC Capital Allocations Annual allocation for HHC Capital needs HHC CEO 5

6 Impact of existing funds flow framework Prepared by Chartis Group LLC Current business model requires numerous internal funding mechanisms to: Pay for services provided by the faculty to HHC, FGP and the MS Provide the Dean with the resources needed to operate a leading, research-intensive Medical School Enable Departments to provide competitive faculty compensation Reconcile funding dislocations caused by reimbursement optimization strategies UMHS has significant unrestricted reserves but the business and funds flow model has led these reserves to be controlled in a highly decentralized manner by each operating unit, department, and division which are able to deploy these reserves as they see fit The methodologies in place over the past few years have also resulted in significant growth in Departmental and MS reserves while hospital reserves have remained relatively unchanged. 6

7 Alternative Conceptual Models for Funds Flow Prepared by Chartis Group, LLC Degree of Change The structure of funds flow will, in part, be determined by the future state business model; some of the potential approaches include: Significant 1 Integrate all UMHS funding such that all operating revenues, expenses and surpluses reside centrally, with each operating unit managing against a revenue, production and expense budget Examples: Cleveland Clinic, Mayo 2A Integrate funding (and management?) of the clinical enterprise (eliminate flows between HHC and FGP); operating surpluses would be held by the clinical enterprise/evpma 2B Same as 2A, but a portion of clinical enterprise bottom line is shared with Dean and Departments Examples: WVU, Dartmouth? Modest 3 Retain current business model and update methodologies to align incentives to overall performance, rebalance future funds flows to build strategic reserves, and potentially rebase select components Examples: Most AMCs 7