The University of Arkansas for Medical Sciences (UAMS) is shedding almost 600 jobs, by eliminating over 300 unfilled positions and instituting 258 UAMS layoffs in 2018.
The UAMS cost savings will be an estimated $26 million–$30.0 million for this fiscal year, and could jump to $60.0 million by fiscal-year 2019. But, even with these deep and far-reaching cuts, the hospital and school may still face a severe deficit. The UAMS budget is expected to rack up a deficit of anywhere from $39.0 million to $72.0 million.
The UAMS job cuts are, in a way, a long time coming. UAMS has run a deficit for three of the past four years, and has found itself floundering as healthcare prices have risen, even as profits have also jumped.
“This is an extremely sad day and the first major reduction in force that I can remember,” read an internal e-mail circulating at UAMS. “This is not an action that anyone is taking lightly and it is not being undertaken because of performance issues but simply because we do not have the money to fund everything we have in the past.”
The UAMS layoffs in 2018 are part of larger issues facing many universities and healthcare practitioners across the country. Many workers in the healthcare industry are being asked to deliver excellent services while struggling against budget constraints. One of the biggest irritants on the market has been the back-and-forth in Washington over the Affordable Care Act (ACA), also known as “Obamacare”.
With Republicans repeatedly trying to repeal the bill, insurance companies began pricing the uncertainty of the healthcare legislation into their premiums. To make things worse, people who qualified for ACA coverage or who had their healthcare supplemented by the bill found themselves unwilling to visit hospitals, due to their fear that the ACA repeal would leave them without a means to pay for their healthcare.
This uncertainty, combined with general bumps in healthcare costs, have created a tough economic climate for healthcare providers.
The UAMS layoffs in 2018 include positions being shed from the now-defunded UAMS Office of Global Health. This follows the closing of the PSYCH TLC program, which provided consultation for Arkansas primary care workers who cared for pediatric patients with mental health needs. That program was shuttered following the loss of $500,000 in funding.
The layoffs affect the state’s largest employer, which currently has 10,900 workers in 73 of the state’s 75 counties. The organization is estimated to have an economic impact of $3.0 billion. The UAMS hospital is the only Level One trauma center in Arkansas, and the only one to provide kidney and liver transplants, among other services.
UAMS is still looking for ways to shore up its budget, including automating some of its administrative processes. The organization assured the public that the quality of care would not be affected by these cuts.
Inadequate State Funding Adding to UAMS Budget Woes
One of the biggest factors contributing to the UAMS layoffs in 2018 is the shortage of state funding that the organization receives. In 2014, the institution had to borrow money to stay afloat, despite desperate pleas made to the statehouse.
At $39.0 million, the UAMS budget deficit is far too high for the organization to completely overcome with job cuts alone. The UAMS financial crisis comes while the institution has about $52.4 million in unrestricted assets, meaning that it can tap into these funds in the event of an emergency. But, considering the size of the deficit and the relatively meager unrestricted asset fund, even that money would do little to solve the problem in the long term.
UAMS receives about $106.6 million in funding from the state government, which is far less than what similar institutions receive. The majority of that funding is used to match Medicaid reimbursements, leaving UAMS with about $21.0 million when all is said and done. The institution was once allocated $120.0 million from the state, but that was cut following the passing of the ACA—the idea being that the new law would reduce the organization’s costs of treating Arkansas’s poorest patients.
Comparatively, the school is also underfunded when contrasted with other similar institutions. For example, the University of Mississippi Medical Center received $188.6 million in fiscal-year 2015, with no required reimbursements.
The UAMS hospital is one of the only bright spots on the school’s balance sheet, generating about 77% of revenues for the entire university. But, with the budget shrinking and UAMS layoffs in 2018 giving the new year a rough start, the school will have to find a way to right the ship or face further cuts.
“UAMS will reduce workforce by 600 positions, including 258 layoffs: UPDATE,” Arkansas Times, January 8, 2018.
“UAMS says more state aid crucial to maintain mission, quality,” Arkansas Times, December 14, 2017.
“UAMS Impact on Arkansas ‘Stronger Than Ever’,” University of Arkansas for Medical Sciences, February 26, 2017.