I recently read an article in Becker’s Hospital Review* that struck a chord with me as we take on a new year at UTMB. The article begins with a mention of Sister Irene Kraus and her famous phrase: “No margin, no mission.”
As I’m sure many of you know, Sister Irene was the founding chief executive of the $3 billion Daughters of Charity National Health System and the only woman to chair the American Hospital Association. She was known for her remarkable business acumen as well as her good humor. Sister Irene believed that one must drive margin in order to fulfill one’s missions.
While academic medical centers are facing a number of new challenges, Sister Irene Kraus’ words from decades ago are still relevant.
Health care spending in the United States was more than $3 trillion in 2015, or about 18 percent of our gross domestic product. According to the Centers for Medicare & Medicaid Services, it is projected to increase to nearly 20 percent of the GDP by 2024. As the article details, the health care industry has historically compensated providers based on volume ― do more, make more. But this model, alone, will no longer suffice.
In 2013, operating margins for hospitals was close to 2 percent. Decreasing reimbursement from Medicare, tougher competition for patients, market consolidation and lack of accurate cost information are among the major challenges facing health systems today. And as an academic medical center, we have additional challenges associated with fulfilling our research and education missions, such as stagnant federal funding for research as well as recruiting and retaining the best and brightest faculty members and students.
We are taking action on every front to respond to these challenges. We continue to expand our UTMB brand and services throughout Galveston and the mainland, while working to further enhance our quality of care. Implementing our margin improvement plans, strategic recruitment practices and continuing to optimize EPIC are also vital steps. We are working to improve grant efficiency while reducing administrative burdens, including the recent addition of a robust grants management system in POWER and the kickoff of our new research strategic planning efforts.
With the excitement of celebrating our 125th anniversary as well as the new Jennie Sealy and League City campus hospitals opening, it is a great time to be part of our UTMB community. And, I feel confident that we are prepared to meet the financial challenges that face academic medical centers because we have such a diverse, talented and driven group of people here all committed to one overarching mission: to improve health for the people of Texas and around the world.
In some respects, we are doing better than many of our counterparts. Our clinical performance and physician productivity increased by double digits between FY2012 and FY2015, while health centers across the country saw decreases in these same areas. UTMB’s clinic visits increased by approximately 26 percent from FY2013 to FY2015. Despite stagnant federal funding levels, UTMB received $73,345,646 in grant awards for FY2015 — a nearly 5% increase over FY2014. And, our educational programs and faculty members continue to garner national recognition for excellence.
But, it is crucial that we continue our collective efforts to improve. For this reason, I encourage you to keep Sister Irene’s words of wisdom in mind: “No margin, no mission.”
*“Margin + Mission: A prescription for curing healthcare’s cost crisis” by Dan Michelson. http://www.beckershospitalreview.com/finance/margin-mission-a-prescription-for-curing-healthcare-s-cost-crisis.html