ANN ARBOR –Michigan Medicine reported projected positive fiscal year-end results today, with an anticipated 0.7 percent ($39.8 million) operating margin on forecasted operating revenues of $5.9 billion.
The results include fiscal 2023 performance from University of Michigan Health, the organization’s clinical branch that includes five hospitals, 125 clinics and the U-M Medical Group, as well as UM Health-West.
These results do not include the impact of the partnership with Sparrow Health System, which was finalized April 1, 2023.
David C. Miller, M.D., M.P.H., discussed the current operating environment, along with the fiscal 2024 plan, to the U-M Board of Regents during its regular meeting.
“We focused during fiscal 2023 on our commitment to our patients, families and community through innovation, health equity and improved experience,” said Miller, who is president of University of Michigan Health and executive vice dean for clinical affairs.
“We did not hit our targeted operating margin for fiscal 2023. But despite significant expense pressures related to labor shortages, and revenue increases not keeping pace with inflation, we’ve continued to maintain our high standards of quality and safety for both our patients and staff.
“This takes a level of commitment and teamwork that is not always easy, but the people of Michigan Medicine should be commended for their efforts to make this work.”
Miller said the financial performance still allows capital investments to move forward, like the construction of a new hospital, called The D. Dan and Betty Kahn Health Care Pavilion and the new specialty and mail pharmacy facility in Dexter. Prudent management of cash reserves allow for these investments to continue despite difficult financial circumstances.
The new 12-story hospital will house 264 private rooms capable of converting to intensive care, a state of the art neurological and neurosurgical center, high-level specialty care services for cardiovascular and thoracic patients and advanced imaging services. Construction continues on the 690,000-gross-square-foot building last spring and it is expected to open in fall 2025.
Also planned is the major expansion into specialty and mail pharmacy services, located at a new facility in Dexter. The expansion will allow Michigan Medicine to more than double the number of prescriptions it fills each year through its existing in-house pharmacy.
Marschall S. Runge, M.D., Ph.D., expressed gratitude to Michigan Medicine employees who have successfully managed many challenges including labor market instability and supply chain shortages.
“Our teams are resilient, dedicated, and quick to find innovative solutions for whatever problem arises. I’m grateful for all that our Michigan Medicine employees do every day to make us a health care provider of choice in the state of Michigan,” said Runge, who is CEO of Michigan Medicine, dean of the U-M Medical School and executive vice president for medical affairs for the University of Michigan.
“Our financial results represent their talent and commitment to the highest standards of patient care. In fiscal year 2024, we expect to deliver that exceptional, life-changing care in more than 6 million outpatient visits and nearly 90,000 discharges in our hospitals.”
The Regents also approved a budget that sets Michigan Medicine financial performance targets for the fiscal year that begins July 1. The fiscal year 2024 plan aims for a 0.7 percent operating margin, inclusive of Sparrow Health System.
This financial performance allows Michigan Medicine to continue to invest in people, technology and facilities.
“We will continue to invest in our incredible teams and innovative ways to provide high quality care across the state, including building on our new partnership with Sparrow Health System,” Miller said.
“Recruitment and retention of our workforce and continuing inflation and rising costs will remain challenges in the next year. But we have a team at Michigan Medicine that is ready and willing to do what it takes to maintain the highest standards of patient care.”
About Michigan Medicine: At Michigan Medicine, we advance health to serve Michigan and the world. We pursue excellence every day in our top rated hospitals, clinics and home care operations, as well as educate the next generation of physicians, health professionals and scientists in our U-M Medical School.
Michigan Medicine includes the top ranked U-M Medical School and the University of Michigan Health, which includes the C.S. Mott Children’s Hospital, Von Voigtlander Women’s Hospital, University Hospital, the Frankel Cardiovascular Center, Rogel Cancer Center, U-M Health West and Sparrow Health System. The U-M Medical School is one of the nation's biomedical research powerhouses, with total research funding of more than $500 million.