Teaching hospitals map plans to jumpstart funds

Veterinary teaching hospitals appear poised to sail through the economy's turbulent waves, averting the sting of deeper state budget cuts.

To counter any financial punches, some university hospitals are executing revised financial plans to rise above setbacks in state funding and retain clientele who might otherwise choose to forego pricier procedures.

For example, Louisiana State University's veterinary teaching hospital imposed a 10 percent fee increase last year on all services, compared to the usual 5 to 6 percent hike. Revenues were up for the year; the downside is the university now mandates all departments, including the hospital, fund even more of their operations.

The school currently has to generate about 80 percent of the hospital's budget, including staff, equipment and service contracts.

"Now that state funding has been cut back, everybody has to focus on becoming leaner and meaner," says Dr. Dennis McCurnin, hospital director. "The side benefit is that the student is getting exposed to the real-life practice situation more than in the past, because we're also focused on dollars and expenses just like practices now."

Dr. Dennis McCurnin

To boost revenue levels, the LSU hospital has aggressively integrated new services - dentistry, oncology, laparascopic procedures, treadmill-based hydrotherapy and a forceplate to evaluate gait in small animals.

At presstime, Mississippi State (MSU) veterinary teaching hospital officials were crafting a similar plan to tackle financial concerns. "We want to generate a higher percent of the revenue needed and become less dependent on state legislatures," reports Dr. Lee Tyner, assistant hospital director.

Dr. Lee Tyner

MSU, like LSU, plans to further leverage doctors' time, allowing increased hospital productivity to enable ample time to devote to teaching and research. The school also plans to form "creative, ground level teams" to provide ideas that improve quality and reduce cost.

At the University of Georgia, the situation is even simpler, yet critical: "We're just trying to pay the bills," says Dr. Doug Allen, veterinary teaching hospital director, who's noticed a dip in the caseload in recent months.

"In economic times, typically veterinary medicine seems to be based on people using discretionary money to take care of their pets. Usually the caseload drops off some. Yet staff salary and facilities need to be maintained in the face of reduced caseloads," he says.

To ensure caseloads and revenue stabilize, Georgia added a couple new services in oncology and neurology, and added an MRI via a lease.

Allen acknowledges the hospital's revenues hinge on a brighter economic future. "Our revenue seems to pretty well track the regional and national economy. What we do is a reflection of societal needs," he says.

Hospitals' dependency on state legislatures varies widely from state to state, according to McCurnin, who conducted a study of a handful of colleges nearly five years ago to try to secure more funding from the Louisiana legislature. The study found that the amount of state support for veterinary teaching hospitals ranged from zero percent to 50 percent.

State funds fading

Today the amount of support for the same schools has dwindled significantly. LSU is currently at 21 percent state funding in the hospital for the operating budget, which includes all staff salaries/ benefits, equipment, supplies, etc.

At the University of Georgia, Allen says there's no profit margin from the state. "Anything we make is plowed back into either salaries or equipment," he says.

To increase revenues, it's highly probable expenses will have to be trimmed, experts say. LSU has hired nonveterinary campus student workers from other disciplines. "We save in salary and benefits expenses," says McCurnin.

Cost-cutting measures

The school, like many others, also leases certain equipment from a $1.5 million radiation therapy linear accelerator machine to a computed tomography scanner, both of which McCurnin says generate decent revenue while decreasing expenses.

In addition, as positions come open at Georgia, while the caseload is down, Allen says there's been no hurry to hire people back.

Financial struggles aren't necessarily anything new to Dean Glen Hoffsis, DVM, of the College of Veterinary Medicine at The Ohio State University. It's how his university handles adversity that has established OSU's hospital as a staple of the Columbus community, he says.

Example of survivor

A decade ago, OSU received $1 million support for teaching functions in the hospital with revenues of $3 million to $4 million. Today, the university records revenues of about $12 million and still only receives $1 million college support for teaching.

"What's happened is that we've figured out how to make the hospital a more self-contained unit financially. Then it spins off all the benefits of being able to teach that many veterinary students and residents," says Hoffsis.

Attributors to OSU's consistently rising revenues are increased caseload and competitive pricing fair to value, Hoffsis notes.

Economic issues aside, some veterinary teaching hospitals also can't help but look over their shoulders at their private counterparts.

Neighborly competition?

"The biggest competition veterinary teaching hospitals have today comes from private referral practices," McCurnin says. "They have a lot of equipment and specialists and can operate more efficiently because they don't have students to teach.

As a solution, he says, "We've got to have equipment and options available that are different from private practice or our trained (specialists) are all going to (depart)."

Hoffsis, however, isn't put off by sizable specialty hospitals in OSU's backyard. "We're in a city that has well over 1 million people in the metro area. It seems at this point like there's plenty of work for everybody; therefore, they don't directly compete. We look at it more as colleagues and we celebrate their success."

While private referral centers may pose threats in certain hot spots, there's little if any competition among veterinary teaching hospitals, says Hoffsis.

Collegial atmosphere

"We cover such a wide geographic area that we don't compete. That's significant because we can compare notes and let our hair down in giving away all the best practices we have developed. It's a luxury we have in veterinary medicine," Hoffsis says.