Burdened by low revenues and cost overruns during its 2005 renovation project, the University Health Center is looking to make up for two tumultuous years of budget deficits.
In January, Housing Director Mike Eyster replaced Dr. Tom Ryan as the health center’s director, and Eyster is now leading the clinic into a season of budget cuts intended to restore the health center to a balanced budget without cutting student services.
But the clinic is not yet in the clear. Costs are still increasing: The University is upping the “taxes” it takes from the health center each year, staff turnover is high, and there are design flaws that will cost the clinic almost $1 million to fix – flaws that include private patient rooms that let sound escape and windows that let cold air in, even when closed.
Student visits, which fell during the year of construction, are starting to return to normal levels, signaling that revenues will also return to normal, Eyster said.
The health center, which is funded by visits and a $100-per-year student fee, plans to seek authorization from the Oregon State Board of Higher Education for a fee that can increase every year, unlike its current fee that increases in alternate years.
“It’s cautious optimism,” said a health center employee, who declined to provide a name for the record in fear of being fired.

Operating in the red

The health center spent more money than it earned two years in a row, financial statements show. In 2005-06, the year of construction, the center earned about $100,000 less than the previous year, causing it to spend $256,721 more than it earned.

In 2006-07 revenues increased about $400,000 over the previous year, yet it still had a $631,788 deficit.
These two years dwindled the center’s reserve funds to less than $800,000, down from about $1.6 million in 2004-05.
“I wouldn’t call it a budget crisis,” said Eyster, who took over the clinic on Jan. 7. “It’s a crunch.”
In the future, Eyster hopes to push forward changes that allow the health center fee to increase annually, allowing the revenues to increase more steadily.
“Some years the budget feels kind of flush,” he said, “and in others it’s very thin.”
This year the center is expected to break even, mostly because of cuts to noncompulsory staff training and technology improvements.
“Hopefully students have not seen the impact of what’s happened,” Eyster said. “Because the kinds of changes we’ve made were specifically designed to not have a negative impact on students.”

Construction struggles

Much of the health center’s capacity was shuttered during the $10 million renovation project, which began on the clinic in August 2005, and was complete a few weeks behind schedule in December of 2006.
With limited capacity, student visits fell from about 27,000 in 2004-05 to about 22,000 in the 2006-07 school year. Numbers this fall have shown signs of rebounding, but compared with fall 2004, visits are still down by 1,600.
But even when the center reopened in fall 2006, one clinic and the dental office still weren’t ready, which caused an even greater decline in visits.
“That was not anticipated,” said Daralyn DeHaven-Murdoch, finance and personnel administrator.
Starting the year at only partial capacity was a significant hit to revenue, Eyster said.
“If school is going to start Sept. 20, you want to have everything done and ready,” he said. “That wasn’t the case. They weren’t done and ready.”
DeHaven-Murdoch said administrators knew clinics would close during construction and fewer students would use the health center, but “we did not think they would be closed for a longer period of time.”
When they were, some students stayed away.
“I suspect a lot of students either delayed things that could be delayed or found other ways to get health care during the years when the health center was torn up for construction,” Eyster said.
But increased expenses following the renovation appear to be the biggest cause of the deficit.
The renovation created three full-sized clinics, which allows it to see more patients, but the expanded clinics also require more staffing. A two-year salary freeze also ended at the start of the 2005-06 school year, leading to an larger jump in salary expenses than expected, DeHaven-Murdoch said.
Other cuts in revenue and increases in expenses were more unexpected:
? Fees the University imposes on the health center could increase from $170,000 to nearly $300,000 each year. The University charges this fee in part because the clinic utilizes Oregon Hall’s billing services.
? The health center lost a $30,000 deal with the athletic department. Athletes used to be sent to the health center for X-rays, but the athletic department recently upgraded its own X-ray machine, and it no longer needs the services of the health center.
? About $70,000 of the $10 million renovation project was ineligible to be paid for by the Student Building Fee’s $10 million allocation as originally anticipated, and the center had to dip into its own budget for things like furniture and some equipment.
? Other necessary improvement projects simply weren’t included in the renovation, such as replacing old windows. Those windows, some of which are in patient rooms, allow “incredible air penetration,” Eyster said. Window replacement could cost anywhere from $500,000 to $1 million.
? A design oversight during the renovation was that a quieter heating system makes it easier to inadvertently hear conversations going on inside private patient rooms. Eyster said he does not believe there have been any reports of confidentiality breaches because of the rooms. To alleviate the problem, flaps have been added to the doors and white noise machines are being used. Sound absorption panels are being considered, Eyster said.
“Even after the renovation and new construction are over,” Eyster said, “those are problems that continue to exist that absolutely have to be addressed.”