Faculty senators on Friday pressed officials for specifics on their plan to address the Medical Faculty Associates’ mounting financial debt after the medical enterprise lost another $48 million in the first half of fiscal year 2025.
GW Chief Financial Officer Bruno Fernandes and MFA CEO Bill Elliott told the Faculty Senate that the MFA is renegotiating contracts and increasing patient access to help grow the enterprise’s revenue and reduce its expenses but acknowledged that these efforts alone will not eliminate its more than $400 million debt to GW and other entities. Fernandes and Elliott remained tight-lipped as faculty senators pressed the officials for a timeline on when they expect the MFA to resolve the practice’s persistent losses and repay its debt but said they are “much closer” to finding a solution than they were “several months ago.”
“I wish I could, but I can’t,” Fernandes said. “But I will tell you that when we do have that information, we will come to this Faculty Senate meeting and provide an update. At this point, we’re not prepared to be able to do that.”
Elliott said he is “happy” with the progress officials are making to better the MFA’s financial status and the plans he and the MFA are putting in place to help reduce the enterprise’s losses at the end of FY2025 and through FY2026. He said although the MFA’s new policies will solve “a lot” of the enterprise’s “operational” issues this year, by next fiscal year officials will have identified and put in place plans to solve the “nonoperational” issues.
“We’re going to come to the end of the year, we’re going to look at this number and it’s going to be better,” Elliott said. “It’s not going to be where any of us want it to be, I’ll tell you right now. We’re not going to solve every problem at the MFA this fiscal year.”
Fernandes said he could not provide a timeline for when officials will solve the “structural imbalances” in the MFA.
Elliott said he expects the MFA’s financial standing will be “better” by the end of FY2025 than it was in FY2024 because the enterprise is maximizing its potential revenue by ensuring doctors’ appointment schedules are fully booked. He also said they are trying to increase patient access to appointments because many prospective patients between July and September 2024 reported that they waited on hold for long periods of time when trying to set up an appointment.
He said he hired a director of patient access in October, which has helped bring the abandonment rate — the percentage of incoming calls that customers drop before speaking to an agent — closer to the industry standard of 5 percent, following a peak of 41 percent at the MFA in August.
“We were up in the 30 to 40 percent of the time that someone would call and get frustrated and hang up,” Elliott said. “The industry standard is to be around 5 percent or below.”
He also said the MFA has worked to increase its revenue by ensuring it adequately uses its equipment, as many can perform additional tests and procedures that would bring in additional revenue for the enterprise. He said officials are in the process of renegotiating cleaning and real estate contracts that will also help compensate for some of the MFA’s losses, which he said will be reflected in the MFA’s performance in the second half of FY2025.
Elliott said he expects those efforts to amount to $11 million in savings for the MFA once officials fully implement them.
“As they start to ramp up and really catch hold, it’s about another $11 million full year impact on those initiatives that will start to catch hold the second half of the year, in addition to the ones that we’ve already put in place,” Elliott said.
Elliott said the MFA will likely incur some additional expenses while onboarding MFA staff for the Cedar Hill Regional Medical Center GW Health in Ward 8, which officials expect to open in mid-April. District leaders and community members in Wards 7 and 8 have raised concerns about the MFA’s ability to staff the hospital amid the enterprise’s financial woes, and officials announced earlier this month they are hiring new physicians to supplement care at the new facility.
Elliott also said the MFA’s full-time equivalent, which measures how many full time employees are working at a company, has dropped by an average of 83 in FY2025 compared to FY2024. Elliott said this drop is mainly due to “attrition” and officials’ decision to transfer some physicians to the Cedar Hill hospital, not layoffs.
“We’re going to have some expenses early on, and the revenue might not catch up right off the bat,” Elliott said. “That’s going to throw some waves into that profit and loss statement, if you will, for the end of the year, particularly since it’s the last quarter,” Elliott said.
After their report, faculty senators questioned Fernandes and Elliott on the timeline they can expect for receiving more information on the MFA’s losses and if the changes will resolve the enterprise’s $400 million debt.
Faculty senator Philip Wirtz, a professor of decision sciences and psychological and brain sciences, asked Fernandes and Elliott about the “elephant in the room” that is the practice’s loss of $107 million last fiscal year. He asked if the reduction in expenses will ensure the MFA doesn’t continue to lose tens of millions of dollars.
“I think it’s great we’re improving, but if we’re not coming close to reducing, I’m just throwing $100 million out because it seems to be a recent experience, if we’re not coming close to that, is this really even an issue?” Wirtz said.
Fernandes said the MFA has a “structural imbalance,” and officials are looking at the “various options” they can take to mitigate the losses but said officials “aren’t going to get into it” at the meeting. He said officials are working on a “daily basis” to fix the operational areas that are impacting the MFA’s finances.
“Whatever Bill does, he can fix all the operational issues,” Fernandes said. “That’s not going to fix the 100 million dollar problem. It’s going to fix some of it, but not all of it.”
Wirtz asked Fernandes when faculty senators can expect to hear details about officials’ plans to solve the MFA’s structural issues. Wirtz said faculty “keep hearing” that MFA and GW officials are “working on” solving the MFA’s debt but have not heard a concrete timeline.
“We are making progress, and we will be able to have that discussion at some point in the near future,” Fernandes said.
Fernandes said the practice’s debt is not an “easy fix” and officials within the MFA are “moving in the right direction” to resolve the debt, but he cannot give any concrete details at this time.
Faculty Senator Don Parsons, a professor of economics, asked Fernandes where the money GW is allocating to the MFA comes from, and whether the University is using money from its endowment — a pool of funds and investments gifted to the University— to cover the financial losses. Fernandes said the losses are not coming out of the endowment, but the MFA’s losses are “eating into” the University’s operating cash flow “on an annual basis.”
The University’s FY2024 operating revenue was $1.78 billion, while its FY2024 operating expenses amassed to roughly $1.88 billion — a roughly $100 million discrepancy, which aligns with the $107 million the MFA lost in FY2024. The University’s FY2023 operating revenue reached roughly $1.67 billion, while they accumulated roughly $1.75 billion in operating expenses — a roughly $80 million discrepancy, also aligning with the almost $79 million the MFA lost in FY2023.
Officials reported the MFA’s FY2024 operating expenses increased by 8 percent from FY2023 to FY2024 due to rising costs of specialty providers and infusion medications purchases, according to the University’s FY2024 Financial Report. MFA operating expenses totaled more than $485 million in FY2024, per the University’s Consolidated Financial Statement.
The MFA’s operating revenue in FY2024 saw an increase of 2 percent from FY2023 to FY2024, which officials said “continues to be impacted” by a rise in patients with government health insurance plans as opposed to managed health plans, according to the report. The MFA’s total operating revenue reached $377 million in FY2024, per the statement.
“It’s not coming out of the endowment, the University pushes off a pretty good amount of operating cash flow on an annual basis that is eating into the operating cash flow from the university,” Fernandes said.
Faculty Senator Jeffrey Ackman, a professor of psychiatry and behavioral health and the former Dean of the School of Medicine & Health Sciences, asked Fernandes how much interest on its debt the MFA owes to the University. Fernandes said in FY2024 the practice owed $16 million in interest to the University, but this fiscal year it will likely be closer to $20 million.
Faculty senators have previously raised concerns that the MFA’s continued financial losses would impact the University’s ability to provide services, including financial aid and academic programs, to students. Faculty Senator Heather Bramford, a professor of Spanish literature, said considering the current “volatile environment” in higher education, the MFA’s losses are concerning for the University.