Madison, Wis.-based UW Health finished the 2023 fiscal year in the black.
The integrated academic health system's operating margin came in at 1.4%, total operating revenue at more than $5.1 billion, and operating expenses at over $5 billion, according to a Jan. 5 UW Health press release shared with Becker's.
"We exceeded our budget expectations in fiscal '23," Bob Flannery, CFO of UW Health, told Becker's. "We've actually been doing better than we anticipated in fiscal '24 for the first five months of the fiscal year as well."
UW Health consists of six main hospitals, one joint operating agreement partner hospital in Madison, and two hospitals inside its main Illinois hospital. The health system also has over 90 clinics across Northern Illinois and Wisconsin, according to its LinkedIn page.
Mr. Flannery said the health system's 2022 operating margin was 3.9%, but he feels good about how it navigated difficult times.
"We saw our revenue grow year over year 9%, and our expenses grew 12%. In that situation, it just doesn't end in the way that you want it to. When expenses are outpacing revenue increases, it's a recipe for problems," he said. "I think that we navigated them well. We put some programs in place to help with some of the workforce recruitment issues that are out there. At the same time, we made some significant investments in our organization and our workforce over that time frame."
Mr. Flannery attributed a dedicated leadership team and patient demand increase to what helped keep the health system at a 1.4% margin in 2023.
Around 808,700 patients received care at UW Health in the 2023 fiscal year, with over 3.7 million outpatient appointments, 221,700 emergency department visits, and 83,500 surgeries. The health system also added over 1,000 new employees to its workforce in the 2023 calendar year, the release said.
Mr. Flannery said the targeted margin for UW Health's fiscal year 2024 is between 2.3% and 2.5%, but he's hoping to beat that.
Mr. Flannery urged other hospital and health system CFOs to focus on expenses and look for efficiencies for a strong 2024 financial year.
"I also think we need to make sure that we're paying attention to our revenue side and making sure that we actually are getting our services documented appropriately and coded appropriately. Then, really working with the payers to make sure that they recognize the increase in cost that our organizations as providers have actually experienced, and actually work with them on actually getting kind of a reset on reimbursement rates to make sure that they're covering the cost of services that we're actually providing to their members," he said.