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Overcoming a perfect storm: an academic cardiology section's story of survival
1Rush University Medical Center, Chicago, Illinois, USA. James_Calvin@rush.edu
Insights
Academic cardiology faced significant deficits. Implementing eight financial principles, including cost management and productivity increases, successfully shifted the practice to profitability while maintaining clinical revenue.
Area of Science:
- Health Economics
- Academic Medicine
- Cardiology Practice Management
Background:
- Academic institutions face increasing financial pressures impacting their core mission.
- A specific academic cardiology section encountered substantial projected deficits requiring immediate elimination.
Purpose of the Study:
- To present a case history of a cardiology section's financial turnaround.
- To outline the principles used to transition from deficit to profitability.
Main Methods:
- Implementation of eight core principles: confronting facts, managing revenue/cost cycles, setting faculty expectations, and quality improvement.
- Strategic reductions in faculty and non-faculty salaries.
- Operational cost reduction coupled with revenue enhancement through increased faculty productivity and reduced accounts receivable.
Main Results:
- Achieved deficit reduction through salary adjustments (faculty: $2M, non-faculty: $1.3M) and operational efficiencies.
- Maintained clinical revenues despite financial restructuring.
- Experienced a temporary decline in research revenue and productivity, with subsequent efforts to foster research post-financial stabilization.
Conclusions:
- The eight-principle framework can stabilize the financial health of academic clinical practices.
- Financial viability is crucial for sustaining both clinical services and research endeavors in academic settings.
Abstract:
Increasingly, academic institutions are grappling with financial pressures that threaten the academic mission. The author presents an actual case history in which a section of cardiology in an academic health center was confronted with huge projected deficits that had to be eliminated within the fiscal year. The section used eight principles to shift from deficit to profitability (i.e., having revenue exceed costs). These principles included confronting the brutal facts, managing costs and revenue cycles, setting expectations for faculty, and quality improvement. The section accomplished deficit reduction through reducing faculty salaries (nearly $2 million) and nonfaculty salaries ($1.3 million) and reducing operational costs while maintaining revenues by increasing individual faculty productivity and reducing accounts receivable. In the face of these reductions, clinical revenues were maintained, but research revenue and productivity fell (but research is being fostered now that clinical services are profitable again). These principles can be used to stabilize the financial position of clinical practices in academic settings that are facing financial challenges.
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