More income is priority for UA Health Network

New CEO Waldrum says nonprofit doesn't mean there's no profit
2013-02-10T00:00:00Z 2014-07-30T17:17:24Z More income is priority for UA Health NetworkStephanie Innes Arizona Daily Star Arizona Daily Star
February 10, 2013 12:00 am  • 

The new CEO of Southern Arizona's largest health entity is prioritizing the private, nonprofit corporation's fiscal health.

Dr. Michael R. Waldrum, leader of the University of Arizona Health Network, comes to Tucson from the University of Alabama Hospital at Birmingham, where as CEO he took the operating margin of a 1,157-bed medical center from break-even up to a steady 6 to 8 percent.

"Some people think that non-profit means no profit, and that's not the case. We have to have a profit," Waldrum said. "The margin allows us to invest in our people and our technologies and our facilities to continue to meet the community needs."

The 50-year-old executive, who also served as vice president of the UAB Health System, is cautious to say whether he will be able to bring up the UA Health Network's operating margin, but he is hopeful. The network includes two hospitals: the UA Medical Center's University campus and its South campus.

The South campus had a slightly negative operating margin of 1.4 percent in its most recent fiscal year, and the University campus had a positive margin of 2 percent.

"Our current margin is very thin," Waldrum said. "We need a margin to be able to have facilities and staff and professionals to provide the care that the community needs. If we don't have a margin, we can't make those investments and we can't pay our staff and do the things we're here to do."

The UA Health Network's Board of Directors would not disclose Waldrum's salary. The network, which includes about 6,000 employees, has gone through several interim leaders since it was created in 2010 following a merger of University Medical Center Corp. and University Physicians Healthcare.

Waldrum is the organization's first permanent president and chief executive officer, and he hopes to provide some stability.

"There has been a lot of turnover and chaos in this organization. But those days are behind us," he said. "My daughter is starting ninth grade, she's in her second semester here. We bought a house. I'm not planning on being the next change of suit in this organization and I don't believe that's in the best interest of this organization, or any organization."

Waldrum is a physician who specializes in internal medicine, and holds a master's in public health and a master's of business administration in addition to his medical degree.

He sat down with the Arizona Daily Star last week. Here are excerpts of the interview:

Q. Why did you make the move to the UA Health Network?

A: There's a large potential here. The struggles this organization has gone through have led it to make a lot of right decisions.

Q: How do you like Tucson?

A: I've never lived in the desert Southwest before ... but it's a beautiful community. What's not to like? The summers are warm, but they are in Alabama, too.

Q: Is the UA Medical Center a community hospital, in your opinion?

A: No, we're not here to compete with TMC (Tucson Medical Center) or with other community hospitals. ... Frankly, this community has had too much competition and it's not benefitting this community. Our role is to provide unique quaternary (advanced and specialized) services and to support the community providers. So the patients who are the sickest and need the most advanced technologies are patients that we should be serving. That's part of innovation, part of research and part of learning. That's the unique role of an academic medical center. I don't believe we should be a community hospital.

Q: What are some of the key ways the organization will be impacted by the Affordable Care Act?

A: It will have tremendous impact on us. Some positive and some negative and some of it is difficult to predict. It is vitally important that we do Medicaid expansion. We carry a large burden for that population currently. Obviously we spend a lot of money providing care to underserved populations. ... The amount of reimbursement for services is likely to go down no matter what happens.

Q: What about money for graduate medical education?

A: Academic medical centers take the biggest brunt of the cuts. We have to look at the issues from a realistic, objective perspective. We are in the process to put teams together to evaluate those issues. ... We may have to fund it ourselves. Or do residents pay for residency slots? Nobody really knows where it is going to end up.

Q: Are you concerned about the loss of Safety Net Care Pool funds, which provided the network with $32 million last year? The fund expires this year.

A: "We're going to partner with colleagues across the state and then Phoenix to look at other ways to fill that gap. It would go back to what is our solution for Medicaid expansion and funding Medicaid in this state. An assessment program has been talked about in Phoenix and locally to help fund Medicaid. My belief is we should do something like that and do it as broadly as viable. ... I know tax is a dirty word. I was very involved in putting a statewide assessment in there (Alabama) to help fund Medicaid. It's a common mechanism that can be utilized to serve the populations that need that.

Q: How important is Medicaid expansion to the network's finances? (Medicaid is for low-income people. The expansion in Arizona would expand the qualifications from 100 percent up to 133 percent of the federal poverty level and by doing that would cover an additional 57,000 Arizonans. More significantly, the state would also then qualify for federal matching funds to restore coverage to about 240,000 childless adults and continue coverage for 50,000 others.)

A: It's fundamental.

Q: So we'd need to have another conversation if Medicaid expansion does not go through?

A: Yes.

Q: Do you foresee layoffs?

A: I don't know. It all depends on everything we talked about. I don't have any plans for layoffs.

"There has been a lot of turnover and chaos in this organization. But those days are behind us."

Michael Waldrum, president and CEO of UA Health Network

Contact medical reporter Stephanie Innes at sinnes@azstarnet.com or 573-4134.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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