UMC Seeks to Generate More Revenue from Property Taxes in Fiscal Year 2023

The Lubbock County Hospital District, which operates the county’s only public hospital as a UMC health care system, is looking to increase tax revenue in the coming fiscal year amid tighter economic conditions affecting the results of the hospital.

During a budget presentation Monday morning in Lubbock County Commissioners Court, UMC President and CEO Mark Funderburk proposed maintaining the current tax rate of 10.3164 cents per year. $100 assessment, which will bring about an additional $2.4 million to the hospital district for the 2022-23 fiscal year. (FY23), up nearly 6% from the previous budget. Approximately $763,000 of this amount will come from new properties added to the tax roll.

After:UMC Health System rated “highly recommended” by US News and World report

In the proposed budget, UMC expects total operating income of $842.12 million. $30.54 million, or approximately 3.6% of this amount, will come from property taxes.

“The healthcare finance landscape has changed dramatically in hospitals from last year to this year,” Funderburk said. Those changes, he said, are primarily due to three factors: spending outpaces income due to inflation, a decrease in supplemental Medicaid funding, and the conclusion of federal coronavirus relief funding.

Funderburk said health system spending rose 10% in the current fiscal year due to supply chain issues and difficulties recruiting and retaining staff. He also cited an increase in the cost of unfunded care, which is expected to exceed $104 million in FY23.

These factors, Funderburk said, led to a projected operating margin of $9.77 million – just 0.4% – for FY23, compared to 3% forecast for FY22 and 2021 and 10. 6% for fiscal year 21.

Even as margins become thin in the year ahead, Funderburk said FY23 is a “ramp-up year” for UMC as the system seeks to lay the foundation for future revenue streams and growing community needs.

Two projects in particular headline this effort. The health system plans to breathe new life into the UMC Cancer Center and build a new $143 million health and wellness hospital in southwest Lubbock, slated to open in 2023.

“We believe we are using the cash reserves built up over the years for both projects very wisely to bring revenue into the system,” Funderburk told the commissioners. “We are growing to capture new revenue so we are ready when additional funding losses occur.”

“In 2023, I call that a ramp-up year, with a (margin increase) that should happen once that revenue stream (from new installs) starts. Right now, you have to pay for the building, pay for the staff, then that revenue stream begins,” he added.

In addition to the operating budget of $838.9 million for FY23, the health system also has a capital expansion budget of $112 million, compared to $82.5 million for the FY22, and a capital budget of $43.2 million, compared to $26.1 million in FY22.

The Court of Commissioners is expected to take action on the Lubbock County Hospital District/UMC Health System’s budget and tax rate on September 12.

Sallie R. Loera