Richmond, Va.-based VCU Health may not quite have broken even during fiscal 2023, but it has started strong in the first quarter of the new fiscal year, CFO James Siegel told Becker's in an interview.
Describing the first quarter of fiscal 2024 as "solid," Mr. Siegel said the current operating margin for the four-hospital system is 4.3%. That compares with a fiscal full-year target of 1.3%.
Like many health systems, VCU struggled in fiscal 2023, mostly with labor-related challenges. Such challenges contributed to a $19.5 million operating loss with a -0.6% margin.
"The tide is beginning to change," he said, adding that there is a long way to go to get back to anything close to pre-pandemic levels of operating performance. Once there, the system could hopefully remember its "muscle memory" to keep improving operationally, he added.
C-suite build
VCU Health has strengthened its C-suite in recent months with the appointments of a chief nursing executive and chief pharmacy officer, both new roles.
But a decision on a new CEO and doubts about who may eventually chair the health system remain a question.
There have been calls by Virginia Gov. Glenn Youngkin for Michael Rao, PhD, to step down from his current role as chair of the health system while also leading the university, a situation supported by Mr. Rao. Current bylaws require the president of VCU to also serve as VCU Health chair. The system is also currently run by an interim CEO, Marlon Levy, MD.
VCU Health has also hit the headlines over an abandoned project in downtown Richmond that left it on the hook for approximately $73 million to $80 million. The various conversations around new leadership are ones the system welcomes, Mr. Siegel said.
"I think it's a question of what does the future look like in terms of governance," he said. "I think it is a big issue to bring the right subject matter expertise to the board."
The system will also be looking to build on the new capacity it now operates as well as potentially "right size or downsize."
"We are always looking at the services in the space," Mr. Siegel said. "There is a focus across the board."
VCU Health also now has a 72-bed children's hospital in downtown Richmond, which may help to relieve constrained capacity by freeing up space elsewhere in the system, Mr. Siegel said. The hospital opened in April 2023 and is the only designated freestanding children's hospital in Central Virginia.