University of Iowa Hospitals and Clinics Budget Narrative


In FY 2020, the strategic focus for the University of Iowa Hospitals and Clinics (UIHC) will continue to center on the offering of a broad spectrum of clinical services to all patients, serving as the primary teaching hospital for the University, and providing a base for innovative research to improve health care.

UI Hospitals and Clinics is committed to providing patient-focused care in an environment devoted to innovative care, excellent service, and exceptional outcomes. These three commitments identified in the strategic plan are the key drivers in creating the FY 2019 operating budgets.  Achievement of each commitment will occur by following defined goals, strategies, and tactics.

  1. Innovative Care
  • Care Delivery - UIHC will be recognized as a state and national leader in developing and implementing new and more efficient health care delivery models that emphasize quality-driven patient experience.
  • Clinical Programs – Select UIHC clinical services will be leaders in the state and national market by offering cutting edge clinical services, robust clinical research, and strong training opportunities.
  1. Excellent Service
  • Patient Satisfaction – Patients and families will be highly satisfied with their entire UIHC experience in all settings.
  • Referring Physician Satisfaction – UIHC will be recognized by referring physicians for its efficient and effective support to their patients.
  • Staff, Faculty, and Volunteer Engagement – Staff, faculty, and volunteers are valued and engaged in the pursuit of UIHC’s vision.
  1. Exceptional Outcomes
  • Safety – UIHC will provide a continuously improving, safe environment for all patients and staff at all times.
  • Clinical Outcomes – UIHC will use a continuous improvement process to achieve exceptional clinical outcomes.

The following are key strategies implemented to achieve UIHC’s goals:

  • Assure patient quality and safety remain a top priority
  • Explore combining of/streamlining administrative structures and entities
  • Aggressive management of labor productivity and effectively flexing to match resources to volumes
  • Review staffing skill mix assuring staff work at the top of their license
  • Optimize utilization of existing facilities, continue renovations to expand acute and ICU bed capacity as well as conversion to single patient rooms
  • Continue to improve off campus access to outpatient services at the Iowa River Landing (IRL) offsite clinic location and new facilities at the North Dodge and Scott Boulevard medical buildings.  These clinics will alleviate the outpatient capacity issues at the current facility on the main campus and allow for more convenient access to services in the community
  • Continue to improve patient access through centralized clinic appointment scheduling and allowing patients/families to schedule directly through UIHC MyChart
  • Continue the focus to improve the patient experience with emphasis on improved access to services, enhanced communication, reduced wait times and  patient satisfaction
  • Continued focus on several key product lines, including Orthopaedic, Cancer, Heart & Vascular, and Neurosciences,
  • Continued emphasis on population health initiatives, including continued Care Coordination focus, Physician Quality and Cost Dashboards, and Payor ACO arrangements
  • Focus on appropriate utilization of drugs, patient supplies and ancillary tests
  • Continued development of innovative initiatives to reduce the costs of care and expand patient’s access to care (i.e. Telemedicine initiatives)
  • On-going policy of contracting with third-party payors at fair and reasonable rates
  • Work with consultant to improve the revenue cycle through efficiencies in the billing and collection processes
  • Maximize the use of the  EPIC information technology infrastructure to provide comprehensive patient information under one common platform
  • Further enhance philanthropy


There are ever-increasing financial pressures on the healthcare industry.  Both governmental and non-governmental payors are looking to reduce health care spend.  In FY 2020, UI Health Care faces continued pressure on reimbursement rates from Medicare and Medicaid, as CMS continues to place increasing importance on quality programs and cost reduction. The State of Iowa also continues to face financial challenges that may affect both academic and clinical funding for University of Iowa Health Care.  Managed Medicaid programs will continue to look for ways to limit claims spend.  Lastly, with the effects of healthcare reform, we will continue to see a push toward providers taking more risk for quality and efficiency results.  These and other external challenges will have an impact in all areas of our mission, ranging from near flat reimbursement for patient care services to continued constraint and competition for research funding.  The necessity to continue to maximize revenue opportunities, grow market share, ensure ease of access to our services, improve throughput, further enhance service excellence and be even more cost efficient in our operations continues to be essential.  

Expense inflation (salary and non-salary) continues to outpace the level of payor rate increases. An average “all-in” salary increase of around 3.0% is projected for next year due to base salary increases and changes in the fringe benefit pool rates. While we continue to standardize product utilization and implement supply chain savings initiatives, medical and surgical supply costs are estimated to rise 3.0% or more due to price increases and changes in technology. Pharmaceutical cost increases are anticipated in the 2.0% range.


The University of Iowa Hospitals and Clinics predicts continued high demand for its services.  Inpatient acute admissions are expected to increase approximately 2.8% while outpatient activity is anticipated to grow more than 5.0% over FY 2019 projections.  The case mix index, reflective of the acuity of care required by inpatients, is anticipated to remain high at a level of 2.1.  


Additional net revenues will be required in FY 2020 to meet the 3.9% operating margin budgeted.  These additional net revenues will be achieved through new volumes and a rate increase of 6.0% approved by the Board in April to be effective July 1, 2019.  Market data indicates that UIHC continues to have lower rate adjustments when compared to academic medical center peers and other Midwest healthcare institutions.   

As always, UIHC is concerned with the effect of higher charges on its patient population.  A study completed by the University HealthSystem Consortium shows that the impact on insured patients is minimal, with little or no change to deductibles and co-payments.  Self-pay patients, who account for approximately 1.0% of UIHC charges, have limited exposure due to UIHC’s discount policy for the medically indigent.  The following table summarizes how increases in rates affect various payor groups:

Rate Increase Impact by Payor:

  • Medicare
    • Charges and cost affect DRG and APC rate setting
    • Charges affect new technology rate setting
    • Outlier thresholds and payments are based on charges and cost
    • Coinsurance up to policy maximum
  • Medicaid
    • Charges and cost affect DRG and APC rate setting
    • Outlier thresholds and payments are based on charges and cost
    • Unknown impacts of move to Managed Medicaid
  • Managed Care
    • Payors with outpatient percent of charge payment provisions
    • Stop-loss thresholds and payments
    • Carve-out arrangements (i.e. high cost drugs, prosthesis, new technology, etc)
    • Coinsurance up to policy maximum
  • Commercial Non-Contracted
    • Payment based on charges
    • Coinsurance up to policy maximum
  • Self Pay
    • Individuals not otherwise eligible for uncompensated care discount policy


UIHC Policy Guidelines for Uncompensated Care Discount Percentages:

2018 Annual Income Guidelines for Uncompensated Care Eligibility Determination (Effective January 22, 2018):

Family Size Poverty Guidelines 200% 250% 300% 350%
1 $12,490 $24,980 $31,225 $37,470 $43,715
2 $16,910 $33,820 $42,275 $50,730 $59,185
3 $21,330 $42,660 $53,325 $63,990 $74,655
4 $25,750 $51,500 $63,375 $77,250 $90,125
5 $30,170 $60,340 $75,425 $90,510 $105,595
6 $34,590 $69,180 $86,475 $103,770 $121,065
7 $39,010 $78,020 $97,525 $117,030 $136,535
8 $43,430 $86,860 $108,575 $130,290 $152,005
* $4,420 $8,840 $11,050 $13,260 $15,470

(*) For family units over eight (8), add the amount shown for each additional member.
Source: Department of Health and Human Services - Federal Poverty Guidelines