Like a boomerang, Dr. Andrew Agwunobi is back in his former role as CEO of UConn Health — which includes the 234-bed John Dempsey Hospital in Farmington and its dental and medical schools — at a time of significant change.He left in early 2022 to become president of Home Solutions at health insurer Humana, after […]
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Like a boomerang, Dr. Andrew Agwunobi is back in his former role as CEO of UConn Health — which includes the 234-bed John Dempsey Hospital in Farmington and its dental and medical schools — at a time of significant change.
He left in early 2022 to become president of Home Solutions at health insurer Humana, after starting with UConn Health in 2014.
Agwunobi, a pediatrician with an MBA from Stanford University, spent less than two years at Humana.
On May 31, he returned to UConn Health as chief executive and executive vice president of health affairs. He was selected after an extensive national search.
Agwunobi’s decision to reprise his UConn Health role was for “a combination of personal and professional reasons,” he said in a recent interview with the Hartford Business Journal.
“I really enjoyed my time at Humana, and I learned a lot,” Agwunobi said. “I was managing their in-home provider care, and it was very interesting, great work. But on a personal level, my wife and I love Connecticut.”
Agwunobi and his wife continued to live in their Westport home while he commuted to and from his Humana job in Boston via Amtrak each week.
“I left for this national-level position, in which I knew I would learn a lot and be involved in the transformation of health care at a national level,” Agwunobi said.
UConn, however, remained in his heart, he said.
“When the search committee reached out to me and said, ‘This position is open,’” Agwunobi recalled, “I thought about it and said, It checks a lot of boxes for me in terms of being back in a system that I really love, that is doing amazing work for the state of Connecticut, and also is at an inflection point in UConn Health history.”
The inflection point involves moving UConn Health — a public entity with 6,104 employees that is part of the University of Connecticut — toward a model that is less dependent on state funding. He said that shift could involve a number of public-private partnerships to help generate more revenue and reduce costs.
‘Open-minded approach’
Agwunobi has rejoined UConn Health following years of financial problems that led Gov. Ned Lamont’s administration to hire healthcare investment banking firm Cain Brothers to identify the causes of the system’s longstanding deficits.
Cain Brothers’ report was made public last June, less than a week after Agwunobi was announced as the health system’s new CEO.
Between fiscal years 2020 and 2023, UConn Health reported cash flow losses averaging $140 million per year, the report found.
Cain Brothers concluded that the “largest reason for the lack of profitability is UConn Health’s employee benefit costs, which are materially higher than the rest of the marketplace.”
It also said UConn Health is one of the smallest academic medical centers in the nation, and will not be able to “achieve necessary scale nor overcome market consolidation that is happening both nationally and across the state.”
The report laid out three main options to improve the system’s financial condition:
- Leasing unused space at John Dempsey Hospital;
- Scaling back-office operations with another hospital;
- Merging with another hospital system.
Agwunobi said he’s still weighing the options contemplated in the report, but believes UConn Health should form public-private partnerships in order to grow its reach across the state.
“We’re going to be very open-minded in terms of what those partnerships might look like, because we believe that being responsible stewards of the healthcare dollar is really important,” Agwunobi said.
He said UConn Health is especially focused on growing its patient volume, translational research, clinical trials and research commercialization components, along with deepening its ties with local communities.
Financial outlook
Despite the challenges, Agwunobi said UConn Health’s financial performance is improving, driven by strong growth in patient revenue, which totaled $957.5 million in fiscal 2024, nearly double what the health system generated in 2020 ($511 million).
By the end of fiscal 2025, net patient revenue will exceed $1 billion, which will be “very helpful as we strengthen our finances going forward,” Agwunobi said.
In fiscal year 2024, which ended June 30, UConn Health generated a $12.6 million operating surplus, Agwunobi said. The hospital system expects to break even in fiscal 2025, he added.
Those results are for UConn Health, including both schools, research and the clinical operations, which include John Dempsey Hospital.
State appropriation
About 13% of UConn Health’s revenue comes from the state.
In the coming 2025 legislative session, Agwunobi said UConn Health plans to ask for an appropriation of $187.9 million — down 5.4% from $198.7 million in 2024.
Through partnerships and other measures, Agwunobi predicts the hospital system can reduce its reliance on state funding.
“We’re on the right trajectory, but we need to further improve our financial picture,” Agwunobi said.
UConn Health is aiming to substantially eliminate state funding for its clinical enterprise, which currently totals about $60 million, he added. The clinical operations include patient care given through its hospitals and ambulatory clinics — not research and academics.
“We believe that if we do the right kinds of partnerships, if we grow efficiently, if we continue to grow our patient volume, we believe that over a period of years, we will be able to eliminate this $60 million state funding to UConn Health,” Agwunobi said. “But that’s not going to happen overnight. It’s going to take a lot of work. It’s going to take a lot of thinking, and we’re excited to kind of move into that phase of transformation.”
Demand for UConn Health’s services is “booming,” he added, with an increasing volume of patients at John Dempsey Hospital, its pharmacy operations, UConn Health’s physician practices and related services.
That growth has been spurred by both expanding and increasing awareness of services offered by UConn Health, Agwunobi said.
For example, last spring, UConn Health opened The Brain and Spine Institute at 5 Munson Road in Farmington, which provides treatment for outpatient neurology services, including spine, multiple sclerosis, movement disorders, epilepsy, headache and stroke.
Those services were relocated from the Outpatient Pavilion on UConn Health’s lower campus to a dedicated, standalone building, which provides more visibility.
“Our mission is to bring quality care to everyone in Connecticut, regardless of your ability to pay,” Agwunobi said. “And that was a little bit of a secret, because we’re out here in Farmington, and a lot of people didn’t know about us, but we’ve gotten that message out, and more people are coming to us.”
To help meet the rise in patient demand, the hospital system has filed a certificate of need application with the state’s Office of Health Strategy to add 23 beds at John Dempsey Hospital.
The hospital “consistently operates at inpatient occupancy levels above industry standards, which often limits and impairs its ability to adequately respond to patient need and demand for inpatient admission,” the application states.
The total cost of adding the 23 licensed and staffed beds would be $1.1 million, the Hartford Business Journal reported in February, citing the application.
The certificate of need review remained ongoing as of late December.
Also, UConn Health this year will spend $15 million looking at cost reductions systemwide, through its annual financial review process, Agwunobi said. In addition, he has launched a strategic planning initiative that will outline a path for the healthcare system for the next several years.
Legacy costs
UConn Health has benefitted from a recent change in how the state covers fringe benefit costs for higher-education institutions.
Starting with UConn Health’s fiscal 2024 budget, the state covers all fringe benefit retirement costs for UConn Health.
However, the amount of the fringe expense reduction was completely offset by a reduction in state support revenue, according to UConn Health.
That means the move was budget neutral to taxpayers, Agwunobi said.
As a result of the change, UConn Health can now apply for more competitive research grants because it won’t have to incorporate legacy costs into its applications for grant funding.
Prior to 2024, UConn Health fringe benefit costs represented about three-quarters of its salary expenses — nearly triple the 25% average for Connecticut hospitals, according to the Cain Brothers report.
“We’re much more competitive when we apply for research grants,” Agwunobi said. “So, we’re very thankful to the governor and the state legislature for doing that.”
