MD Anderson CFO: Further cost reductions possible if revenues don't bounce back

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The University of Texas MD Anderson Cancer Center in Houston may be forced to further reduce costs if it does not improve its financial health.

That was the warning this week from Dan Fontaine, MD Anderson's CFO and executive vice president of administration, according to a Houston Chronicle report.

In January, MD Anderson announced plans to eliminate about 1,000 jobs, or 5 percent of its 20,000-person workforce, to strengthen its finances. The organization is scaling back its workforce after it reported a combined $102 million operating loss in September and October and a $9 million operating loss in November. In December, MD Anderson lost another $58 million, bringing its operating deficit to nearly $170 million four months into its fiscal year 2017, according to the report. Leaders initially projected a $21.4 million shortfall for the September-December period in its budget approved in August.

"There are always monthly fluctuations, especially in December," Mr. Fontaine said, according to the report. "We're not yet seeing the appropriate balance of revenue and expenses, but hopefully we'll see the benefits of the cost-saving steps we've taken, including the workforce reduction and attrition, as we move into the spring."

Mr. Fontaine warned this week that MD Anderson would need further expense reductions if revenues don't rebound, but said "at this point in time there are no plans for a second workforce reduction," reports the Houston Chronicle.

MD Anderson's financial troubles began in March 2016 when it rolled out a new Epic EHR system. MD Anderson leaders this week continued to attribute the financial difficulties mostly to the launch of the Epic EHR system, according to the report. However, they said that is no longer a major contributor to MD Anderson's financial losses, as the organization is "95 percent up to speed" now, the report states.

Despite its sagging financials, Mr. Fontaine downplayed the December losses, arguing it's not uncommon for one month to be out of order because insurer reimbursements can fluctuate, according to the report.

"I certainly hope December is the outlier, not November," Mr. Fontaine said, according to the report. "January through March will give me a better feel. In today's day and age, I don't like calling numbers until I see them, but there's been more patient activity every January I have been here. I have the sense that was the case this January, too."

 

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