As the current fiscal year comes to a close on June 30, the University of Michigan Health System proposed a budget for the upcoming year to the University’s Board of Regents and presented their forecasts for total spending in fiscal year 2013.

Forecast data released by UMHS estimated a total spending of about $2.374 million by the end of the year. Accounting for future initiatives and expected funding cuts due to sequestration, the regents approved a budget of about $2.505 million for the 2014 fiscal year.

In a presentation to the regents, Doug Strong, CEO of University Hospitals and Health Services, expected a “break-even financial performance” and an operating margin of zero percent.

“We’ve worked throughout the year to improve (the UMHS) profile and have succeeded in doing that,” Strong said.

Although the operating margin was less than what was budgeted, he said external factors and early financial downfalls reduced the profit margin.

In August, University launched MiChart, an electronic health information system that would work to enhance patient documentation.

Strong said operational problems caused worrying financial burdens on the health system that were larger than predicted. Furthermore, the system added staff “in anticipation of growth,” but continued to face unexpected expenses through the year.

“The investment in MiChart had a greater negative impact that we expected; it was kind of a double dip,” Strong said.

Paul Castillo, chief financial officer for University Health System, said UMHS recognized the large investment for its building projects and IT infrastructures. These included the new C.S. Mott Children’s Hospital and Von Voigtlander Women’s Hospital and the expansion of the adult emergency department.

“One of our strategic initiatives is to really take care of the sicker population,” Castillo added. “We’ve worked with (Saint Joseph Mercy Hospital and Chelsea Community Hospital) to take less acute patients and (have those hospitals) take care of them.”

In the last year, UMHS was recognized for its top performance in nationally recognized honor lists that included U.S. News & World Report’s national Honor Roll of Best Hospitals, Truven Health/Modern Healthcare’s 100 Top Hospitals, the Leapfrog Group’s Top Hospitals list and the top 10 hospitals for patient safety from University Health System Consortium.

Strong said the University had the only hospital in the country to be regarded on the four top performance lists.

Furthermore, data collected by UMHS disclosed a rising patient satisfaction index, with a reported 91.4 percent on June 1 and a targeted 93 percent by 2017.

“It’s a tough business — as soon as your activity growth goes south of you, it impacts the organization very significantly,” Strong said. “Our job is to improve efficiency and equality at the same time and I think a lot of organizations like us have to be aggressive about it.”

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