68 - Impact of Implementing a New Funds Flow Methodology in an Academic Pediatric Department on Profitability, Collections, and wRVUs

Publication Number: 3065.68

Janette Lee, UC Davis Health, Sacramento, CA, United States; Brittney Phillips, University of California, Davis, School of Medicine, Sacramento, CA, United States; Brooke Trifeletti, University of California, Davis, School of Medicine, Folsom, CA, United States; Pamela Roualdes, University of California Davis Children's Hospital, Sacramento, CA, United States; Satyan Lakshminrusimha, UC Davis, Sacramento, CA, United States

Background: Academic medical centers use varying Funds Flow models to allocate clinical revenues to departments. Some utilize defined formulas (e.g., $/ wRVU or staffing models), while others distribute actual cash collections. The impact of these differing methodologies on departmental financial and productivity outcomes remains unclear.

Objective: To determine whether implementing a Funds Flow methodology based on defined formulas is more profitable than traditional cash collection transfers for academic pediatric departments.

Design/Methods: UC Davis Health implemented a new Funds Flow model on July 1, 2021. We reviewed three fiscal years of pre-implementation data and four fiscal years of post-implementation data. For each year, total departmental profit, collections, and work RVUs (wRVUs) were summarized by division. Two-tailed t-tests were used to assess differences in mean values before (Pre) and after implementation (Post).

Results: Departmental profit increased in each of the four years following Funds Flow implementation compared to the three-year pre-implementation average (figure 1).
Division-level wRVUs as a percentage of total departmental wRVUs showed statistically significant changes in several divisions: Genetics, Cardiology, Neonatology, Gastroenterology, Hematology/Oncology, Pulmonary, Allergy/Immunology/Rheumatology (AIR), and Child Development. For example, Neonatology's share decreased from 32% pre-implementation to 24% post-implementation (figure 2A). Division-level collections as a percentage of total departmental collections also varied, with several divisions showing statistically significant changes: General Pediatrics, Genetics, Neonatology, Infectious Diseases, Child Development, and Hospitalists. For example, Neonatology's share of total collections decreased from 26% pre-implementation to 15% post-implementation, while the Hospitalist division increased from 4% to 9% (figure 2B).These changes impacted the $/wRVU earnings to the division (figure 3).

Conclusion(s): Implementation of a Funds Flow methodology was associated with increased overall departmental profit. Most divisions maintained relatively stable proportions of total collections and wRVUs, with notable exception of Neonatology. Implementation of an aligned funds flow brought equity among divisions in the department of Pediatrics with fairly similar margins in all divisions. Division chiefs must pay close attention to the details and formulas utilized in funds flow methodology to make sure their divisions can continue to thrive.

Figure 1 - Impact of Funds Flow on Profit, Operating Revenue, and wRVUs
* p less than .05 Post Funds Flow compared to Pre Funds Flow

Figure 2. Pre and Post Funds Flow Productivity (A) and Collections (B) by Division
* p less than .05 Post Funds Flow compared to Pre Funds Flow

Figure 3. Changes in $/wRVU Pre and Post Funds Flow by Year in select Pediatric subspecialties
Data from 2019 - 2025. Funds Flow was implemented in Fiscal Year (FY) 21/22