May 11, 2016 Larry Hollier, MD, FACS, FACC, FRCS Chancellor LSU Health Sciences Center New Orleans Steve Nelson, MD, CM, FCCP Dean, LSUHSC School of Medicine New Orleans Dear Drs. Hollier and Nelson: Yesterday we received UMC’s revised budget as amended by the House Appropriations Committee. After considering an aggressive determination of expansion savings and what we can achieve through improved cost trends, we are still left with an additional 25% reduction to our originally requested (and DHH- audited) budget for SFY 2017. Additionally, we helped the State in this SFY 2016 by agreeing to work with them to manage State General Fund cash flows and make better use of Federal Matching rates (the “refinance” funds). Our portion of the assis tance has been stripped away in the new SFY 2017 budget, costing us $20 million, with no opportunity to adjust expense. As a result of this budget, we are now left in the unfortunate situation of beginning to plan for drastic expense reductions. As you know, a large portion of our funding supports faculty and residents, and we are quickly reaching a new contract year starting July 1, 2016. We will be requesting a 25% reduction in our contracts with LSUHSC and Tulane University and have less than 60 days to work through these contract reductions. We look forward to working with you and Tulane leadership collaboratively to determine the most appropriate way to achieve this level of contract reduction and are ready to discuss at your soonest opportunity. Regards, Gregory C. Feirn Chief Executive Officer
