By Sally Linder
A proposed medical facility that would house Student Health and Counseling Services and University Medical Associates took another step forward Monday when an Ohio University Board of Trustees committee met to review the draft financial forecast and business plan. Although the University Resources Committee called for some revisions, its members echoed the sentiment of Vice President for Finance and Administration Bill Decatur's opening salvo: "We can do this. It works."
The proposed health center, introduced at February's board meeting, would replace Hudson Health Center and the UMA clinic in Parks Hall. According to Vice President for Student Affairs Kent Smith and College of Osteopathic Medicine Dean Jack Brose, the facilities are no longer well suited to handle the volume, type and quality of service students and other medical consumers need and deserve, and Hudson is in declining condition. A combined facility would be more financially feasible for each partner and would provide more opportunities for collaboration and shared services than two separate structures.
At its last meeting, the Board of Trustees expressed support for a combined facility, which would cost an estimated $18.75 million to construct. Board members wanted to see if the numbers would show the facility could be financial sustainable, however, in keeping with their desire to avoid new debt, pay down existing debt and improve the university's balance sheet.
"In my time on the board, this is one of the biggest decisions we've been asked to make. We need to get it right," committee Chair Larry Schey said. He and other members, however, repeatedly acknowledged the relevance and importance of the project.
In response, Decatur, Smith and Brose presented the committee with draft budget assumptions and projections through 2015 for the facility and operations.
A better facility
When presenting numbers for the facility, Decatur stressed that the numbers erred toward the conservative, "with more upside potential than downside."
The budget was built around assumptions that include a 75,000-square-foot facility built at $250 per square foot -- allowing for a mid-range quality of construction -- on the site of Pepsi TailGreat Park near Richland Avenue and South Shafer Street. Student Health and Counseling Services would utilize 50 percent of the space, UMA would use 40 percent and a diagnostic center would occupy the remaining 10 percent.
Financing would come from a $20,625,000 bond paid over 25 years at a 5 percent blended rate. The bond would be repaid proportionately from rent UMA would pay the university and which the College of Osteopathic Medicine would subsidize from funds already identified in its five-year plan; diagnostic center revenues (to be determined with help from an impartial third-party reviewer); and a student facilities fee set at about $14 per quarter for the building portion (added to a $23 operations fee, that would total approximately $37 per quarter for students), beginning when the facility opens. The budget scenario would preserve Ohio University's financial viability ratings with the state.
Committee members acknowledged that certain assumptions were conservative, such as the bond rate, but also thought expenses in the latter years of the budget might be higher than projected. Several members also encouraged the university to budget for ongoing depreciation to provide funds later for inevitable repair and replacement costs as the facility ages.
Assumptions, including the location, could change as other project partners solidify their involvement. O'Bleness Memorial Hospital and OhioHealth regional health care system over the past weeks have heightened their interest in exploring ways to participate. Their involvement with the health center -- and with one another -- could impact how the diagnostic center is structured and what specialty practices could be available, which might shift budget assumptions.
Enhancing student services
Smith presented a revised business plan for Student Health and Counseling Services that would add new services and position the center to be more self-supporting. He put forth a financial model that would include revenue from diagnostic services, fees for service, third-party billing to insurance companies and a waivable student fee to increase services that would replaced with a fixed fee once the building is completed.
The approximately $40 waivable quarterly student fee, set to go into effect in fall 2008 and cover new services in advance of the new facility, will be structured to provide an advantage for students who choose it. Those students would avoid most co-payments for services, which could easily reach $40 in one visit. Students who opt out of the fee would pay all required co-pays.
This arrangement also provides a safety net for meeting the budget for the proposed new services. Although the budget model assumes that about 40 percent of students would opt in ? and that's considered conservative -- there still would be income generated by co-pays from students who don't pay the waivable fee. Student and Graduate Student senates have endorsed with some caveats such a waivable fee, which would be exempt from the state's fee caps.
The level of student fees is in line with those charged by other institutions, according to the plan.
"This is nothing different than what other institutions are facing," Smith said, pointing out that the amounts are in line with what several other competitors in the state already charge.
If successful, the financial model could allow Student Health and Counseling Services to reduce by $500,000 annually the general fee funds it currently requires.
In line with goals
Throughout the meeting, committee members kept their eyes on goals, both the university's and the state's, from student success to research to retaining talent in Ohio.
The increased services students would have available go to the heart of retention, for example. The plan identifies studies and surveys that show retention is enhanced when students have access to adequate mental health services.
The project also would improve the ability of OU-COM to recruit and retain the best faculty and physicians, thus maintaining a high standard of teaching and patient care, according to Brose.
"It's difficult to recruit physicians to Athens when we show them (clinic) space in a (converted) dormitory," Brose said, adding that others with more modern, functional facilities actively recruit UMA physicians, who provide students with practical training in addition to their teaching and research.
The college needs the extra space that would be freed up in Parks Hall to accommodate an increase in its class size from 100 to 140 over the next few years, which the U.S. Department of Education recently approved.
As partners who serve Ohio University's faculty and staff, as well as community members, UMA also is committed to working with the university to keep health care affordable.
Finally, OU-COM is a contributor to the state's health and economy, in the spirit of a University System of Ohio center of excellence.
"We keep 62 percent of our graduates in Ohio, much higher than other medical schools," Brose said, pointing out that at any one time, OU-COM has as many post-graduate students in training in Ohio as does Ohio State's medical school.
To be viable in a competitive environment, the project must move forward quickly, ideally receiving Board of Trustees approval for the facility, the bond and the student fees at the April board meeting. Committee members asked that the project team get commitments from partners, refine the numbers and offer three budget scenarios ranging from best case to worst case.
President Roderick J. McDavis also told committee members that the university would explore the feasibility of raising money for the project.
"I believe there's a big possibility of external funding," he said, indicating that he has already begun talks with Vice President for University Advancement Howard Lipman.
The committee will meet via conference call once more before the board meeting to review and solidify the proposal so it is ready to put forth for board action at the April 18 meeting.
To speak with a media representative regarding this story, please contact Senior Director of Media Relations Sally Linder at 740-597-1794 or firstname.lastname@example.org.
Updated March 19, 2008, at 4:33 p.m. to clarify student fees associated with the proposed facility.