ECU medical school turns profit

Chancellor says 'slash and burn' tactics not used in $15 million turnaround

GREENVILLE -- Reversing years of budget deficits, the patient care programs at the East Carolina University medical school made money this year, ECU officials said Tuesday.

The medical school's faculty, which includes about 300 physicians who teach and treat patients, reported an $800,000 surplus in revenues of $132 million for the 2006-07 fiscal year. The patient care program lost $14.1 million the previous year.

ECU Chancellor Steve Ballard told the ECU board of trustees at a meeting in Greenville that the good news was a first step in the five- to six-year process of turning around the finances. He said school officials can't declare success but can show that they are serious about changes.

"It is a monumental achievement to change a budget from a huge set of red numbers to an $800,000 surplus," he said.

Christopher T. Collins, a private management consultant who serves as interim executive director of the faculty practice plan, attributed the improvement to changes in billing, renegotiating contracts with insurers and renegotiating contracts for physicians' services. The school also cut expenses, he said.

Collins, an employee of ECG Management Consultants of Boston, also said more needs to be done to improve the finances.

"We're not out of the woods," he said. "We're headed in the right direction."

Collins traced the budget problems to a federal law in 1997 that reduced reimbursement for physicians who treat patients in federal health care programs.

He said the medical school had $50 million to $60 million in reserves before that but that school officials used the reserves to fund deficits for several years. "They burned down reserves," he said.

Collins and Ballard said that ECU did not have a major reduction in jobs or shut down programs to save money.

In a memo to faculty, the chancellor said that the school "avoided 'slash and burn' tactics and preserved the integrity of the medical school's mission."

Collins said there were about 28 fewer faculty members on any given year and the school had experienced a turnover. But he said faculty members were not "leaving in droves."

Last year, 41 faculty members left, and 37 were hired. The previous year, 48 left and 60 were hired. Collins said 23 faculty members were hired this year.

He said surveys of departing faculty indicated that most left for "family issues," such as a spouse taking a better job elsewhere.