University of Missouri Health Care outlined a plan to save $25 million over the next three to five years Monday morning.
MU Health Care CEO Jonathan Curtright and Chief Financial Officer Mike Blair announced the plan at a meeting of the UM Board of Curators Health Affairs Committee in January. Monday Curtright and Blair outlined cuts that will be made as part its plan to maintain $100 million in operating income over the next 10 years.
Executives in the health care system identified three levels of cost savings from the easiest items to cut to the hardest. Only items in the top "A" level will be cut, Curtright told the board.
"We believe this has a high probability of success," Curtright said.
About $12 million will be saved from renegotiated contracts, according to documents provided to the committee. MU Health Care has over 500 open positions, Blair said. Another $4 million will be saved by filling openings to reduce premium pay and $4 million more will be saved by adhering to other staffing goals, according to the documents
MU Health Care estimates the system can save about $5 million from using materials and services more efficiently, according to the documents. Blair said this will comprise looking at how the system uses supplies, medical kits, even furniture the system does not need.
MU Health Care will only cut positions that will allow the system to both save money and deliver the best patient outcomes quality of care it can, Blair. After about 18 months, the savings should reach $20 million, Blair said.
UM System President Mun Choi commended Blair's team for coming up with the savings plan.
"Mike this is a very impressive approach," Choi told Blair.
Last year, MU Health Care revenues surpassed $1 billion for the first time. Financial results revealed Tuesday showed it is well on its way to passing that mark again.
Through the first eight months of fiscal year 2019, MU Health Care recorded revenues of $701.2 million, 5.5 percent higher than revenues during the same period last year.
While revenues are up, net income is down. MU Health Care recorded operating income of $104 million for the full fiscal year that ended June 30. So far this year, operating income is down about 22 percent percent from the same period last year, to $54.2 million.