Hartford Business Journal

18 HARTFORDBUSINESS.COM | JANUARY 13, 2025 5 TO WATCH really important," Agwunobi said. He said UConn Health is espe- cially focused on growing its patient volume, translational research, clinical trials and research commercialization components, along with deepening its ties with local communities. Financial outlook Despite the challenges, Agwunobi said UConn Health's financial perfor- mance is improving, driven by strong growth in patient revenue, which totaled $957.5 million in fiscal 2024, nearly double what the health system generated in 2020 ($511 million). By the end of fiscal 2025, net patient revenue will exceed $1 billion, which will be "very helpful as we strengthen our finances going forward," Agwunobi said. In fiscal year 2024, which ended June 30, UConn Health generated a $12.6 million operating surplus, Agwunobi said. The hospital system expects to break even in fiscal 2025, he added. Those results are for UConn Health, including both schools, research and the clinical operations, which include John Dempsey Hospital. State appropriation About 13% of UConn Health's revenue comes from the state. In the coming 2025 legislative session, Agwunobi said UConn Health plans to ask for an appropri- ation of $187.9 million — down 5.4% from $198.7 million in 2024. Through partnerships and other measures, Agwunobi predicts the hospital system can reduce its reli- ance on state funding. "We're on the right trajectory, but we need to further improve our finan- cial picture," Agwunobi said. UConn Health is aiming to substan- tially eliminate state funding for its clinical enterprise, which currently totals about $60 million, he added. The clinical operations include patient care given through its hospitals and ambulatory clinics — not research and academics. "We believe that if we do the right kinds of partnerships, if we grow efficiently, if we continue to grow our patient volume, we believe that over a period of years, we will be able to elim- inate this $60 million state funding to UConn Health," Agwunobi said. "But that's not going to happen overnight. It's going to take a lot of work. It's going to take a lot of thinking, and we're excited to kind of move into that phase of transformation." Demand for UConn Health's services is "booming," he added, with an increasing volume of patients at John Dempsey Hospital, its pharmacy operations, UConn Health's physician practices and related services. That growth has been spurred by both expanding and increasing awareness of services offered by UConn Health, Agwunobi said. For example, last spring, UConn Health opened The Brain and Spine Institute at 5 Munson Road in Farm- ington, which provides treatment for outpatient neurology services, including spine, multiple sclerosis, movement disorders, epilepsy, head- ache and stroke. Those services were relocated from the Outpatient Pavilion on UConn Health's lower campus to a dedicated, standalone building, which provides more visibility. "Our mission is to bring quality care to everyone in Connecticut, regard- less of your ability to pay," Agwunobi said. "And that was a little bit of a secret, because we're out here in Farmington, and a lot of people didn't know about us, but we've gotten that message out, and more people are coming to us." To help meet the rise in patient demand, the hospital system has filed a certificate of need application with the state's Office of Health Strategy to add 23 beds at John Dempsey Hospital. The hospital "consistently oper- ates at inpatient occupancy levels above industry standards, which often limits and impairs its ability to adequately respond to patient need and demand for inpatient admission," the application states. The total cost of adding the 23 licensed and staffed beds would be $1.1 million, the Hartford Business Journal reported in February, citing the application. The certificate of need review remained ongoing as of late December. Also, UConn Health this year will spend $15 million looking at cost reductions systemwide, through its annual financial review process, Agwunobi said. In addition, he has launched a strategic planning initiative that will outline a path for the healthcare system for the next several years. Legacy costs UConn Health has benefitted from a recent change in how the state covers fringe benefit costs for higher-education institutions. Starting with UConn Health's fiscal 2024 budget, the state covers all fringe benefit retirement costs for UConn Health. However, the amount of the fringe expense reduction was completely offset by a reduction in state support revenue, according to UConn Health. That means the move was budget neutral to taxpayers, Agwunobi said. As a result of the change, UConn Health can now apply for more competitive research grants because it won't have to incorporate legacy costs into its applications for grant funding. Prior to 2024, UConn Health fringe benefit costs represented about three-quarters of its salary expenses — nearly triple the 25% average for Connecticut hospitals, according to the Cain Brothers report. "We're much more competitive when we apply for research grants," Agwunobi said. "So, we're very thankful to the governor and the state legislature for doing that." Dr. Andrew Agwunobi talks with staff at John Dempsey Hospital in Farmginton. CONTRIBUTED PHOTO Andrew Agwunobi Continued from page 17

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