VC Notes Archive Office of the Vice Chancellor
Friday, March 28, 2025

How much money does it take to operate the Medical Center each day? The answer is almost $6 million! Our current year's annual budget is $2.1 billion. These are huge numbers.

Our governing body, the Board of Trustees of the State Institutions of Higher Learning, sets forth specific financial metrics for the universities under their purview. One of those metrics is Days Cash on Hand, or DCOH. This is basically the amount of money we must save to keep us operational if we weren’t able to bring in any money. It’s sort of a rainy-day fund. Currently, we are required by the IHL Board to have 90 DCOH. We are working with them on a long-term plan to steadily increase that number.

There is a saying about academic medical centers that goes “if you have seen one AMC, then you have seen one AMC.” The point is each AMC is very unique and no two are alike.

In our case, we are: 

  • The only AMC in Mississippi  
  • The state’s only safety net hospital, with a mandate to provide care to underserved patients 
  • The only site in the state for some very specialized care such as organ transplant services and pediatric heart surgery 
  • The only Level IV NICU (highest level of care) 
  • The only Level I trauma center 
  • The flagship institution in Mississippi for biomedical research 
  • The only institution offering Doctor of Medicine, Dental Medicine and Occupational and Physical Therapy degrees, certain PhDs and many health care-related certifications 
  • The only place in the state offering many specialized clinical services

There are many AMCs around the country. And many of them are very different than we are, especially in the patient payor mix, the amount of external funding support received for research and the level of endowments. The national AMC average DCOH is 185. That’s roughly six months of cash reserve for operations. In our case, if we had that as a goal, we would have to make significant financial/operational adjustments. Our mission for the underserved would not be possible, and our ability to invest in our campus infrastructure (roofs, chillers, roads, HVAC, etc.) would suffer terribly. The critically important mission areas of education and research would be squeezed to the bare bones with the strong likelihood of cuts to many programs. As happens when you simply look at averages, within the AMC group across the country there are wide ranges. Some organizations have less than a month of cash reserves on hand. We would never want to approach that. 

Here, we strive to find the balance of appropriate reserves to meet IHL requirements, expectations for financial sustainability and strong bond ratings with the ability to invest in much-needed infrastructure and growth – here in Jackson and at our other locations.  

We are right in the midst of budget season. As of today, we are in a positive position this fiscal year compared to where we were budgeted. This is good news and is the result of many efforts.   

Across the organization, more discipline and accountability has resulted in: 

  • Being able to see more patients in our clinics 
  • Increasing efficiency in the operating rooms, allowing us to provide more needed surgeries 
  • Close review and careful decision making about every staff/faculty hire 
  • The ability to give merit and market compensation adjustments 
  • Realization of revenue cycle improvements

We are on target to end the year with about a 5-6% positive operating margin. While many for-profit organizations would not be happy with this outcome, for us, it means we are able to invest in our campus, our facilities and our mission areas. And we can continue to invest in our workforce through both merit pay and market adjustments.  

As we go through developing the next fiscal year’s budget, it is very important that we pay attention to anything that will create increased year-over-year operational costs. An increase in the cost of operations reduces our DCOH. An increase in operational costs reduces our ability to invest in capital improvements and our people. As we grow, there will be some required increase in operational costs associated with more patient volume, but it's crucial that we closely monitor this and proceed with caution. We anticipate future reductions in funding we receive from Medicare and Medicaid, our largest payors, including supplemental payments. To weather potential reductions such as this, we must keep our operational costs lean, so we stay operationally nimble and able to meet unforeseen challenges that may come our way. To meet our required financial metrics and to invest in our campus and our people, we must stay disciplined, controlled and focused on our top strategic priorities.  

These are the things on my mind as we work to develop our FY26 budget. The good news is that we should end this year with a positive margin and that there are many worthwhile investments to be made. All three of our mission areas – education, research and clinical care – are vibrant and growing (thanks to your hard work) and having a positive impact on A Healthier Mississippi.

Signed, Lou Ann Woodward, M.D.

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