University Hospitals' Insurance Could Help Cover Cost of Potential Lawsuits Over Fertility Clinic

University Hospitals Main Campus in Cleveland
University Hospitals Main Campus in Cleveland
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University Hospitals’ annual report, released this week, shows the hospital system is in excellent financial shape.

UH reports it had more than $253 million in net income in 2017, which was a 94 percent increase over the previous year. And experts say the hospital system would likely weather any financial storm from lawsuits connected to destroyed eggs and embryos at its fertility clinic earlier this year.

UH has a cushion which helped improve its 2017 earnings, said Case Western Reserve University’s hospital finance expert J.B. Silvers.

“They had $120 million in investment income on top of their operating earnings so they’re in great shape,” Silvers said.

But looming over all the good financial news is that malfunction of a storage tank at the UH fertility clinic in March.

In a letter sent to patients in late March, hospital officials said, “We now believe about 950 of our patients were affected by the failure of this storage tank….we have determined that the total number of affected eggs and embryos for these patients is more than 4,000…”

A local judge is working to consolidate more than 40 lawsuits against the hospital system stemming from that incident.

UH has a large amount of insurance to cover potential lawsuit payouts, Silvers said.

“They have a fairly large amount of insurance to cover contingencies like this, number one. And number two, they self-insure for a lot of that, so they have already isolated reserves, enough cash, for their typical liability that they expect,” he added.

UH did not address the impact that lawsuits may have on its finances in its annual report but in an email, officials said, “The system’s financial health is strong and we remain committed to keeping our stakeholders informed.”

Hospital system officials said a full discussion of its financial performance can be found in the Investor Report for the period ended December 31, 2017.


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