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Reed Hutchinson
UCLA Photographic Services |
CFO explains hospital's finances to employees
by wendy soderburg
today staff Writer
As the new chief financial officer for the UCLA Medical Center, Paul Staton has set several ambitious goals for himself. A crucial one is helping his fellow employees understand the intricacies of the hospital system’s finances, a task he regards as more important than ever in these tough fiscal times.
UCLA’s mostly self-supporting
medical center receives roughly 3%
of its funding from the state, Staton said, totaling $30 million out of the hospital’s net patient service revenue of $950 million. And while $950 million sounds like a decent chunk of change, keep in mind that the actual profit margin for the medical center was $9.2 million for 2004-05, well below its $20-million goal.
Not satisfactory, according to Staton. “There’s always room for improvement,” he said, acknowledging that last year was a transitional one for him and the rest of
the new executive team (David Callender, CEO of the UCLA Hospital System; Mitch Creem, CFO of medical sciences; Thomas Sibert, CEO of the group practice plan; and Posie Carpenter, COO of Santa Monica-UCLA Medical Center). “We were all learning to work with each other.”
Staton noted that, over the past couple of years, UCLA Medical Center’s expenses have risen with the higher influx of Medi-Cal and uninsured patients in the emergency room. Other events, such as a potential California Nurses Association strike, will have a negative impact on financial performance.
“I think this year could have been a lot worse; we started to see some signs of improvement toward the latter part of the fiscal year,” Staton said. “But it also could have been much better.”
Hospital administrators are often asked why the medical center — a not-for-profit organization — needs to produce a bottom line, he said. “We need to generate a profit to reinvest in equipment for patient care, pay off our debt, provide academic support and maintain cost-of-living increases for our staff,” Staton explained. “So any net income for fiscal year 2006 will go right back into the medical centers.”
Staton and the rest of the executive team have taken a new approach to the budget process, meeting with the chairs, division chiefs and CAOs of the clinical departments and getting their feedback on patient-volume projections. They have also created a task force to control supply costs. On his own, Staton is trying to mend the “disconnect” he sees between the finance and operations areas by getting them to work as business partners.
A nine-year employee of UCLA Medical Center, Staton was named interim CFO last September, then assumed the position permanently in March. The Camarillo, Calif., resident is an accountant by trade.
“I’m very excited about the medical center’s new executive team,” Staton said. “There’s a lot of energy going on, and we are truly trying to run UCLA Medical Center as a business, with standard business practices and tools. It’s a lot of long hours, but believe it or not, we’re actually having fun.” |
