The University Record, July 6, 1993

U-M Hospitals room rate stays same under $589 million budget

A $589 million operating expense budget for the U-M Hospitals was approved by the Regents at their June meeting. In the 1993–94 budget, effective July 1, the acute care daily room rate remains at $525 for the second year. This amount reflects a 21 percent reduction from the rate of two years ago.

The average charge for an intensive care room holds for the fourth year at $1,747. In addition, there is no change in ancillary rates.

“This budget reflects our ongoing commitment to be more cost-effective while continuing to improve our quality of care and service,” said John D. Forsyth, executive director of the U-M Hospitals. “With health care reform on the horizon, we can’t afford to operate any other way.”

In the previous two fiscal years, the Hospitals’ cost effectiveness program saved $44 million; another $22.5 million in savings is anticipated in 1993–94.

The 1993–94 budget also anticipates that inpatient admissions, length of stay and outpatient clinic visits will remain nearly the same or be slightly improved from last fiscal year. The budget projects an operating margin of $27.3 million and an overall excess of revenues over expenses of $56 million.

“We are continuing to meet our commitment to hold rates down,” noted David Southwell, Hospitals’ financial officer. “Because we reduced our daily room rate by more than $135 a year ago, we’re actually ahead of our plan.”