Feb. 26, 1998

Last week, the Circuit Court ruled on the case regarding our proposed affiliation with Columbia/HCA Healthcare Corporation. Opponents of our affiliation have challenged the authorizing legislation (act) in court, and we have been awaiting a decision for several months.

Counsel for our opponents released to the media some—but not all—of the information on the court’s decision, portraying the decision as a tremendous blow to MUSC. Unfortunately, many of you first heard the story on the news or read about it in the morning paper. I regret your having to get the information in this way, especially since the whole story paints a much brighter picture.

Two key issues of concern to MUSC were decided in our favor. Perhaps the most important issue deals with the constitutionality of MUSC affiliating with a private organization. The judge ruled that such a business relationship is not unconstitutional. The other question was whether the deal negotiated with Columbia/HCA is fair and reasonable. The judge ruled that the deal is fair and reasonable. Both of these rulings came as good news.

The Circuit Court decision also included rulings against the act which authorized the affiliation. For example, as explained during one of our communications meetings months ago, the affiliation proposal was placed under the title of another higher education-related bill. The purpose was to expedite its processing in view of unforeseen delays. Key leaders within legislative circles advised us that this is not an unusual practice. The members of the General Assembly and general public were well-informed of this issue and, as you are aware, it was highly publicized. (The court noted that the General Assembly and the citizens were “most probably aware.”) Nevertheless, the court ruled this unconstitutional.

The legislation also included specific references to Columbia/HCA (such as in wording regarding the protection of employees) rather than to an unnamed partner. The judge also ruled this unconstitutional. Most recently, the leadership of MUSC determined that the responsible course of action at this time is to appeal the case to the State Supreme Court. The case involves a number of issues and questions, as indicated above, which can be fully resolved by moving forward with the appeal. These issues are not only important to MUSC, but also to the state’s higher education institutions and state government.

The Circuit Court’s decision has provided us with helpful guidance as we update our strategic plan. Through appealing to the State Supreme Court we will achieve final resolution to a number of important issues. I will continue to keep you informed in as timely a manner as possible as we move forward.

W. Stuart Smith Interim Vice President for Clinical Operations Interim CEO, MUSC Medical Center

Financial Update

• Tom Keating, administrator for Finance and Support Services, updated the management team on the Medical Center’s financial performance as we near the end of fiscal year 1997-1998.
• Keating said the Medical Center’s balance sheet, a statement of our assets and liabilities, is in good shape.
• Our cash position is the amount of money we have on hand to cover operating expenses. At this time last year, our cash position was at $71 million dollars. However, that figure included funds we were holding for the Department of Health and Human Services. Without those funds, we would have been about where we are now, which is at $48 million, or 55 operating days’ worth of available funds. This is an acceptable amount to have in reserve, according to University HealthSystem Consortium standards.
• At this time last year, our accounts payables totaled $6.6 million. This year, the total is $2.8 million.
• Keating said that the difference is probably due to the good efforts of the university to stay current in this area.Keating also displayed the Medical Center’s income statement, a breakdown of our revenues and expenditures through Dec. 31, 1997.
• The total amount of revenues and charges is currently about $7.7 million below the amount budgeted. Keating explained that in August 1997 (after our 1997-1998 budget was adopted), the federal government passed the Balanced Budget Act. This act drastically altered Medicare and other federal reimbursements, reducing the amount of revenue coming into the Medical Center. This year, the total impact of the Balanced Budget Act will be about $6 million. The current shortfall also is due in part to decreases in interest revenues, the timing of payments of IITs (intra-institutional transfers) and other factors.
• The Medical Center’s total expenditures are currently down $2 million from what was budgeted, and revenues are down $7 million, leaving our net income reduced by $5 million. However, $7.5 million was budgeted in the non-mandatory plant fund category and only $2.1 million has been spent, so our financial position is good overall. The net increase to our fund balance is $516,372.
• Keating said many large infrastructure expenditures are planned for fiscal year 1998-1999, yet our revenue stream will continue to be nibbled away by the Balance Budget Act and other economic forces. These factors will result in leaner bottom lines for the Medical Center.
• Keating asked that directors and managers keep these developments in mind as they finalize their 1998-1999 budget packets. The impact of the Balanced Budget Act will make for tighter budgeting in the future.

Announcements

• Kristen Karig of the Office of Public Relations announced that a survey on readership of The Catalyst and other MUSC publications is being distributed to faculty members, employees and students. This survey was created by a subcommittee of the communications council (made up of representatives from the university and Medical Center) to determine how MUSC’s internal publications can be improved to better serve readers. Be on the lookout for the survey and please take a moment to complete it and return it through campus mail. It is due back March 9.
• Bill Rust, manager of Healthcare Network Services in the Center for Computing and Information Technology, announced that CCIT has several openings for field engineers. Field engineers install, diagnose and repair Intel-based workstations and associated equipment. A position description is available from Rust (792-3403 or e-mail rustb). CCIT is an MUSC department. However, its operations, including staff, is outsourced to Thermo Information Systems, an information technology provider for MUSC. These positions are with TIS and are not MUSC or state-affiliated positions.