leaders addressed the Medical University Hospital and university’s
budget situations at the Dec. 2 faculty town hall meeting in the Basic
President Ray Greenberg began the presentation by recognizing some of
the latest accomplishments and work conducted by MUSC faculty and
staff. Next, he discussed the hospital’s financial situation. Greenberg
said that upfront costs, new equipment, supplies and hiring of
experienced clinical staff for Ashley River Tower (ART), combined with
the rebasing of Medicaid’s reimbursement rates contributed to the
hospital’s financial shortfall during the past fiscal year.
Within the past six months, efforts have squarely focused on addressing
the financial challenges within the hospital. Greenberg praised Stuart
Smith, vice president for operations and executive director of the MUSC
medical center, and his leadership team for implementing a series of
initiatives to reduce costs and to improve efficiency. Greenberg said
that expense reduction goals involve more efficient staffing, reducing
supply costs and other programmatic changes. The total amount of
anticipated improve-ments through June 2009 should be sufficient for
the hospital to end the current fiscal year with a positive margin.
Already, the October financial statements indicated that the hospital
was operating in the black.
Greenberg addressed several specific MUHA budget-related questions
Was ART too expensive?
By comparison to other recently completed and current hospital
construction projects in the Charleston area, the cost per square foot
for constructing ART is in the mid-range.
What is happening to patient volumes?
Although patient volumes remained relatively flat from June to October,
renovations in the main hospital limited the capacity for growth. Since
October, as bed capacity has increased, the volume of admissions has
risen to record levels. Virtually all beds in ART are now open and with
the relocation of oncology inpatient care there, the facility has been
operating near capacity.
With staffing changes, will MUHA have too few nurses to deliver excellent care?
MUSC has always retained comparatively high nursing
staff-to-patients ratios compared to other hospitals in the state and
elsewhere. For example, as reported by U. S. News and World Report, the
ratio of nurses to patients at selected South Carolina hospitals is:
MUSC (2.0), Roper (1.6), Greenville Hospital (1.6) and Palmetto
Health/Richland (1.4). Even with changes in staffing levels, MUSC
maintains a comparatively high level of staffing when compared with
other teaching hospitals. A principal focus of staffing changes has
been to reduce dependency on personnel from outside agency staff, who
are more expensive than MUHA employed staff. Patient satisfaction
levels have continued to trend upward, most recently about the 80th
percentile nationally. In addition, Patrick Cawley, M.D., MUSC medical
director, is leading an effort to assure that patient safety is
maintained at historically high levels.
University budget status
Provost John Raymond related specifics of the state appropriation
funding levels, which support the university’s budget. As a public
institution of higher learning, MUSC receives state-appropriated
dollars. In the first four months of FY2008, MUSC experienced an
unprecedented $17 million decrease in state appropriations, posing
significant operating challenges for the institution in meeting its
missions. MUSC has not seen funding levels this low since the state’s
economic downturn around the late 1990s, said Raymond.
In July, MUSC took an initial 2.68 percent cut ($2,600,977); in August,
another 3 percent ($2,865,635) and in October, another 11.9 percent
($11,367,917) resulting in a 17.58 percent cut or $16, 834,529 in state
funding. MUSC’s budget plan also anticipates a potential 5 percent
further budget reduction based on recommendations from the state’s
board of economic advisors.
The state’s three research institutions—Clemson, University of South
Carolina (USC) and MUSC— have raised tuition in response to previous
reductions in state appropriations. According to Raymond, MUSC sits at
a disadvantage because of its smaller student body, which cannot
realistically be expected to offset the magnitude of lost state funding
by tuition increases; plus MUSC students do not receive lottery
scholarships, placing a large burden on them and their families.
Raymond spoke about differences in the state’s Mission Resource
Requirements (MRR) funding model, a formula provided by the South
Carolina Commission on Higher Education to the state to annually assess
the fiscal needs of South Carolina’s public institutions. In 2008, MUSC
received 52 percent of calculated need based on the MRR funding formula
compared to higher percentages at peer institutions like Clemson (71
percent) and USC (67 percent).
“In dealing with the cuts in state funding, we were not starting from a
level playing field, because MUSC historically has had a lower base of
its needs met when compared with most other higher education
institutions in the state,” Raymond said. “We cannot simply make up
this difference with tuition, since we have a higher percentage of
in-state students and a smaller student body.”
In breaking down the university’s allocation of October’s 11.9 percent
budget cut, the reductions within individual units were based upon
their respective contributions to total university expenditures.
According to Raymond, university leaders considered several options for
distributing budget reductions to administrative and academic units.
Although units were encouraged to develop funding responses uniquely
suited to their funding streams and core missions, the process was
guided by a set of core principles, such as preserving university
reserves (operating cash on hand), minimizing layoffs and avoiding
disproportionate burdens on specific employee groups.
Leaders of the academic and administrative units (including the deans
of all six MUSC colleges, the library system, and various support
units) submitted plans that were consolidated into an overall budget
reconciliation plan. The plan includes staff reductions through a
universitywide hiring freeze, as well as a mandatory four-day furlough
among 1,215 staff and faculty in the colleges of Nursing and Dental
Medicine, the library, the Office of the Provost (student and research
support areas), and the Vice President for Finance and Administration.
The plan also mandates reductions in non-personnel expenses, including
reductions in state-funded travel, holds on equipment purchases, and
supplies, renovations and other services/leases. The plan will result
in a more than $15 million reduction of expenses.
Faculty and staff have expressed concerns that the furloughs will be
particularly difficult for individuals with limited financial
resources. “All of us are sensitive to the struggles that many
university employees will experience during this furlough period,”
Raymond said. Nearly 300 individuals have volunteered to take
additional voluntary unpaid furloughs to help to deal with the budget
reductions. To assist individuals and families, the MUSC Foundation has
created the Furlough Relief Fund to help support MUSC employees
undergoing financial hardship because of loss of pay during the
mandatory furloughs. Financial assistance will be dependent on the
amount of money contributed to the fund. Tax deductible gifts can be
made to the MUSC Foundation at http://www.musc.edu/giving.
In conclusion, Raymond spoke about the current dilemma regarding
planned construction and renovation projects. Institutional leadership
reviewed 31 previously approved renovation projects, and decided to
defer 22 of them in order to delay expenditures of about $9 million.
The Drug Discovery and Bioengineering buildings are two high-profile
projects that will be located at the heart of MUSC’s campus and are
slated to begin construction in 2009 with a completion date set for
2011. Both projects have secured state grant money and federal
construction awards that may be jeopardized if construction of both
projects is delayed. In addition to providing new research space on
campus, those projects also are slated to add two large auditoria and
other classrooms, faculty offices, and a pre-clinical laboratory for
the College of Pharmacy.
“For many of us, it’s difficult to see these new buildings going
forward when our employees are facing real-life problems with job
security and financial hardship,” Raymond said. “It is important to
note that 95 percent of the funding for these two buildings was
obtained from competitive federal grant mechanisms and state matching
funds, which cannot be re-programmed for other uses, despite our severe
financial challenges. We must weigh the very real concerns of our
employees against the potential value that these buildings could bring
to our campus for decades to come.”
After seeking guidance from faculty and academic leaders, the
administration has recommended a four-to-six month pause to allow a
reassessment, to seek broader input, and to rebid both projects as a
single consolidated construction effort, in hopes of obtaining cost
The session ended with a question-and-answer period and appreciation to
the faculty senate for hosting the event. A commitment was made to host
a follow-up meeting after the new year.
Friday, Dec. 12, 2008