MU official: Financial health of University of Missouri Health Care is stable

University of Missouri Health Care — long the financial engine of the University of Missouri system — faces some financial headwinds, Ryan Rapp, UM System executive vice president for finance, told the Board of Curators last week.

But it remains healthy and will withstand the challenges to turn around, Rapp told the board.

"MU Health Care faces financial constraints as expenditure growth has outpaced operating revenue growth while significant capital investment exhausts the health care system's debt capacity," reads the board document . "MU Health Care's financial plan represents management's commitment to restore financial performance to target over the five-year horizon. If MU Health Care's reserves fall below 150 days in FY 2023 or FY 2024, MU Health Care will submit a turnaround plan to the president and provide a detailed update to the finance committee."

The documents state that in fiscal year 2022, MU Health Care was the only unit below its financial target and performance for fiscal year 2023 through the second quarter is below its financial target.

That's nothing to worry about, Rapp said in a Monday phone interview.

"Just because we're off target in a given year is really no cause for alarm," Rapp said.

Curator Greg Hoberock on Thursday questioned Rapp if the five-year target was too ambitious, but Rapp said the turnaround plan can be pursued if the hospital doesn't hit its target.

"Management has committed to hitting both the operating margin and days cash on hand numbers reflected in the plan through FY 2023 and FY 2024," the board document reads.

The "acute financial impact of the pandemic" is affecting MU Health Care as it is all hospitals, Rapp said Monday.

"The primary driver has been increased labor costs," Rapp said. "There's nothing specific to MU Health Care about this."

The hospitals have record patient volumes, he said.

Current building projects include the MU Children's Hospital, on the MU Hospital campus. It's on time and on budget, said Richard Barohn, MU executive vice chancellor for health affairs, at Thursday's meeting. A grand opening is planned for summer 2024.

All current building projects were planned expenses, said Christian Basi, MU and UM System spokesman.

The financial health of MU Health Care is stable, said Mun Choi, system president and MU chancellor, in a Friday statement. He noted that the credit rating systems have given the system very good ratings. It's the second-highest credit rating, Rapp said.

"I am very optimistic about the future of MU Health Care," Choi said in the statement. "MU Health Care is in a strong financial position and has significant resources to meet operations and to thrive as an organization."

The financial plan approved Thursday demonstrates that MU Health Care is on track to grow to serve Missourians, Choi said.

"Some of the key investments that have been made include the new Roy Blunt Precision Health Building, Children’s Hospital, Medical Science Building, the Thompson Center for Autism and many others," Choi wrote.

Those building investments may slow in the short term, according to the financial plan.

"MU Health Care's financial plan also includes a reduction of planned capital investments until reserve levels begin to replenish," the document reads.

Despite that, Rapp on Monday said he had no concerns.

"Every year we have to adjust our capital plans," Rapp said. "Every project currently in progress is on target."

Roger McKinney is the Tribune's education reporter. You can reach him at rmckinney@columbiatribune.com or 573-815-1719. He's on Twitter at @rmckinney9.

This article originally appeared on Columbia Daily Tribune: MU has a plan to turn around MU Health Care financial downturn