Funding Our Future
To the YSM and Alumni Communities:
A little over a year ago we faced an uncertain financial future. In the fiscal year ending June 30, 2020 (FY20), Yale School of Medicine had suffered a significant decline in clinical revenues, as we decreased the number of surgeries performed to create bed capacity for COVID-19 patients and reduced face-to-face outpatient visits due to a shortage of testing and masks. A year later, many of you have asked how we are doing. The short answer is, “We are okay.”
We will finish this year in the black and better than anticipated, largely due to two positive outcomes. First, clinical volumes increased earlier than expected in the beginning of the year. When we developed our budget for FY21, we anticipated that we would see a second wave of COVID-19 patients, although we did not expect it to have as great a financial impact as the first, because we would now have adequate testing capability and personal protective equipment, and we had become better at treating patients with COVID-19. This has proven to be true. Second, interest on our reserves exceeded expectations due to a stronger than anticipated financial market. In addition, through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, we received some funds that offset a portion of our clinical losses.
Throughout the past year, we have worked to become more efficient and to reduce expenses. Integration of our business offices has allowed us to leverage resources across departments. Our travel and entertainment expenses were, as expected, dramatically lower during the pandemic. These savings allowed us to invest in gap funding for our younger researchers and to invest in our strategic goals, including advancing diversity, equity, and inclusion; supporting mentorship and career development; and enhancing our research infrastructure.
We still face long-term economic challenges that pre-date the COVID-19 pandemic. For example, the current funds flow model within the school is overly complex and not always aligned with the academic mission. Clinical revenues and grant revenues accrue to departments, but educational and research expenses are often centralized. Over the years, we, like other schools of medicine, have developed a complex series of taxes and rebates that make it difficult to attribute revenues and expenses or link them to outcomes. In fact, we have created an administrative burden and new expenses.
Second, even as we work to control expenses in YSM, the cost of University services (i.e., grants management and IT costs) rose sharply last year, and this is not sustainable. We are working with the Provost’s office to develop a methodology to enable the school to have more control over these expenses, and I am very grateful to Provost Strobel for his support.
A group of leaders in YSM has begun the task of examining our internal funds flow model with the goal of simplifying it and aligning funds flow more readily with our missions. The group includes chairs, lead administrators, and leaders of the clinical, research, and education missions. We expect that the group will offer recommendations in late summer. We will model any suggested changes for the remainder of the fiscal year before implementing them.
As when we faced the financial impact of COVID-19, we will follow a set of guiding principles as we pursue this work. Our financial models must reflect our strategic goals. We must share data in a transparent way and without shame and hold each other accountable for reaching our goals. We must respect the autonomy of departments, while eliminating duplication, competition, and siloes. Change is not easy, particularly when money is involved. We are committed to an iterative process to ensure that we do not create unintended consequences.
We will make value-based decisions that will make Yale School of Medicine stronger for many years to come.
Nancy J. Brown, MD
Jean and David W. Wallace Dean of Medicine
C.N.H. Long Professor of Internal Medicine