Governor, School Officials Release Independent Report On UConn Health

STORRS/FARMINGTON, CT — An independent study acknowledged recent growth at UConn Health, but warned state and university officials that more steps are needed to make the network operate more efficiently.

Gov. Ned Lamont and University of Connecticut President Radenka Maric Friday announced that they have received the final report from an independent, healthcare investment consulting firm that was engaged by the state to assist in the "development of a strategic vision for the future of UConn Health's clinical operations." Produced by Cain Brothers, the report was commissioned late last year and provides an overview of different strategies and models for UConn Health to achieve "a larger scale and greater financial stability."

The release of the repot came a day after Dr. Andrew Agwunobi agreed to come back at UConn Health's chief executive officer after a two-year stint in the private sector.

"For an organization approaching a transformative phase, it is always valuable to have a third-party assessment as part of its planning efforts," Agwunobi said. "We are therefore thankful to the governor for his partnership in providing us with this study which we will incorporate into our strategic discussions."

Agwunobu said he is "still reviewing the report," but agrees with key themes:

• UConn Health's "achievements" in quality of care, medical and dental education, research and growth are "impressive"
• UConn Health's "clinical enterprise" needs to "broaden its scale and explore strategic initiatives to seek greater financial independence."

"We will be studying the report carefully as we engage in our planning this year," he said.

According to the report, UConn Health has a medical school ranked 53rd by US News and World Report in research and 70th by Blue Ridge Institute for Medical Research (middle of the
pack nationally).

The UConn Health Patient Care Enterprise is comprised of a single-site hospital, various outpatient locations, and a faculty physician group that combined, has generated cash flow losses (operating earnings before interest, depreciation, and amortization expenses) averaging $140 million annually over the past four years before any state transfers, according to the report.

Recent accounting changes beginning in 2024, however, will result in "materially reduced fringe benefit expenses" for UConn Health because those costs are being absorbed by the
State, the report indicates. UConn Health will still generate a loss after the accounting shift, according to the report.

UConn Health’s "patient care enterprise is "subscale, unprofitable and unable to financially support the academic mission nor fund recruiting or research for the medical school," the report says. Therefore, "Financial support from the State has been necessary to fund both the academic mission as well as losses from the patient care enterprise," according to the report.

About a quarter of UConn Health's patient care is provided to Medicaid recipients
and the uninsured.

"This public mission is shared by other large health systems in the State, who also provide about a quarter of their care to the uninsured and Medicaid recipients," according to the report.

The report added, "UConn Health's Patient Care Enterprise has market-leading patient experience and quality-of-care metrics. It has also shown impressive growth for the last few
years, taking market share from local private-sector competitors. Despite this recent growth, UConn Health’s Patient Care Enterprise remains one of the smallest academic medical centers (“AMC”) in the nation (it is the smallest AMC associated with a state flagship public university) and materially sub-scale.

"While recent growth has been positive, organic growth will not be enough to achieve necessary scale nor overcome market consolidation that is happening both nationally and across the state."

Said Lamont, "UConn Health is one of the most highly regarded academic medical centers in the country and has experienced significant growth in the last few years, but to take that next step – to be number one – we need to work collectively to expand the scale of the medical center’s clinical operations through strategic initiatives that reinforce its financial sustainability and enable it to achieve greater fiscal independence over the long term.

"The research provided in this report provides a foundation for everyone at the table – including the UConn Health Board of Directors, the UConn Board of Trustees, the Comptroller's Office, President Maric’s office, my administration, and others – to work together on solutions that will assist UConn Health in thriving for the next generation."

See the full report here.