This story has been updated.
The University of Connecticut launched a new strategic planning initiative Wednesday to enhance patient revenues at its Farmington-based health center as it continues to grapple with eroding state aid.
Gov. Ned Lamont and UConn President Radenka Maric, who jointly announced the hiring of a health care investment consulting firm, said the state will conduct a rigorous evaluation of all options to ensure the center will continue to provide the highest quality care.
“UConn Health is one of the leading medical centers in the Northeast, and the research and developments being performed there are transforming modern health care,” Lamont said of the center, which includes UConn’s medical and dental schools and John Dempsey Hospital. “The formation of this strategic vision will help this institution successfully thrive and lead in this field for another generation.”
But some state officials have questioned whether the center — and Connecticut’s other public universities and colleges — will thrive given recent state budget trends.
Lamont and the General Assembly have channeled hundreds of millions of dollars from federal pandemic grants and state budget surpluses into higher education since COVID-19 first struck in 2020.
Higher education leaders and other advocates say the fiscal challenges created by the coronavirus are far from over — and that their institutions already had been suffering from limited state aid for many years before the pandemic arrived.
The governor, a Greenwich Democrat and fiscal moderate, says university leaders should have known these federal grants and surplus allocations were temporary and now must be weaned off of them.
But higher education leaders and some legislators counter that everyone knew the temporary aid was going toward ongoing expenses, like wages and benefits. And as federal pandemic aid expires and the huge state budget surpluses of the past few years shrink, they say Connecticut must find some other way to support its colleges and universities.
State support for the health center dropped by more than 50% this year, falling $235 million. But a significant portion was offset by a new policy through which the state covers the bulk of higher education units’ fringe benefit costs. The health center’s fringe costs are projected to drop $186 million this fiscal year compared with last, with most of that change due to the new policy.
The university’s financial office projects state aid will drop another $41 million next fiscal year, unless legislators and Lamont change something during the next General Assembly session, which convenes Feb. 7.
The UConn Board of Trustees already has taken steps to counter this problem.
The $1.54 billion health center budget it adopted in June for 2023-24 cuts spending by almost 8% from the prior fiscal year. The trustees also drew $22.1 million from the health center’s reserves to keep the new budget in balance.
And patient revenues from John Dempsey Hospital — which already cover about 60% of all health center expenses — are projected to rise $65 million this fiscal year.
Those revenues have more than doubled over the past decade, jumping 141% since 2014.
Still, a health care investment consulting firm will be retained to assess the marketplace and try to build on this success, and also to expand the center’s research, academic and public service missions.
“I am proud of the dramatic strides UConn Health has made over the past several years to grow revenues and improve our fiscal outlook,” Maric said. “We are confident we can meet the state’s objective to operate with increasing efficiency while continuing to successfully carry out our core missions.”
Sen. Saud Anwar, D-South Windsor, co-chair of the Public Health Committee, said as the analysis gets underway, services for people who rely on UConn Health, including uninsured people and those on Medicaid, must be protected.
“UConn does more than its share to take care of the people without insurance and people with Medicaid, providing them the highest quality of care anybody can get in the state,” he said. “The workforce at UConn is one of the finest in the country. As we try to analyze things, we want to make sure that the Medicaid population and the uninsured population is protected, and that the health care workers at the University of Connecticut Health Center are protected. Quality before profits and people before profits should be an important consideration in health care.”
Sen. Derek Slap, D-West Hartford, co-chair of the Higher Education Committee, said he welcomes the review, but UConn Health’s mission should be a focal point in the analysis.
“Learning how we can potentially strengthen UConn Health’s finances and its public mission is a good thing. It is a public good, so I think we need to maintain that,” Slap said. “I have not heard from the administration that this is a Trojan horse for privatization. I’m heartened by that.
“The mission is different from some of the other hospitals,” he said. “The clientele, the patient mix is different. There are challenges UConn Health has in terms of finances, but that doesn’t mean it’s a failure. I support the effort by the administration to ask questions and be good stewards of the state’s resources. We just need to not lose sight of what UConn Health is and what it should be for generations to come.”
Clarification: This story has been updated to reflect that although state funding for the health center dropped by $235 million this year, a large part of that loss was offset by a new policy in which the state picks up the health center’s fringe benefit costs.