UC-Davis Medical Center Reports Decreased Earnings

The University of California-Davis Medical Center in Sacramento reported net income of $33 million for fiscal year 2004, a 23.7% decrease from $43.3 million the year before, the Sacramento Bee reports. Patient revenue increased by 2% to $783.3 million from $767.9 million in FY 2003.

Labor costs increased by 7% in FY 2004, after an 11% increase in FY 2003. According to the Bee, medical center officials attribute such cost increases to wage increases for registered nurses.

In addition, patient volumes decreased by 6.3% at UC-Davis clinics, in part because of a shortage in primary care physicians. Facility administrators also reduced the number of patient visits to make clinic physicians available for training for an electronic health record system being implemented. According to the Bee, patients at clinics typically have private health insurance, and revenue from private insurers offsets losses from treating Medi-Cal and Medicare beneficiaries, as well as the uninsured.

UC-Davis Medical Center reported a 12% decrease in revenue from Medicare beneficiaries because of lower reimbursement rates for procedures including transplants, burn treatments and intensive care services.

Hospital administrators also reported that cash on hand decreased to about $163 million -- enough to cover expenses for about 90 days -- at the end of FY 2004 from about $208 million -- enough to cover 114 days' expenses -- at the beginning of the fiscal year.

CEO Bob Chason said, "You're going to see days of cash on hand go down even more," adding, "I could see it hit 60." Chason said that using cash reserves is better than eliminating staff positions, but he added, "I can't honestly say whether we would eliminate positions. We will try to do everything possible short of that" (Rapaport, Sacramento Bee, 11/19).