Fiscal Year 2011 offered a unique opportunity to celebrate a significant milestone—Emory’s 175th anniversary—while also launching several new initiatives that provide exciting promise and opportunity for Emory’s future. During its 175-year history, Emory has grown from a small liberal arts college to a global research university with broad education, research, and societal impact. Economically, Emory is the fourth-largest private employer in metro Atlanta, accounts for more than $5.1 billion in annual economic activity, and continues to grow. Emory, including Emory Healthcare, supports directly and indirectly almost 50,000 jobs in Georgia. As impressive as these figures are, and as dramatically different as Emory is today, the focus on mission remains steadfast.
Overall, key financial indicators for Emory moved in a positive direction in FY2011. Emory’s endowment continued to rebound following the economic turmoil of 2008―2009. Although the worldwide economic climate remains volatile, the endowment increased from $4.7 billion to $5.3 billion for the one-year period ending August 31, 2011. Liquidity and cost of capital are well positioned, and Emory’s credit ratings from Standard and Poor’s and Moody’s Investor Services remained strong at AA and Aa2.
Moody’s July 2011 report recognized Emory’s approach by stating: “Emory’s governance and management is viewed as a credit strength for the University.” Moody’s noted several management actions that addressed the financial impact of the economic downturn and added that they “expect Emory to continue to demonstrate good management best business practices and board engagement with these credit-worthy approaches.”
Best practices involve taking steps for the future, and, both programmatically and financially, Emory’s future increasingly will involve effective partnerships to deliver fully on its promise.
To advance academic research and education, Emory continues to forge strategic partnerships. For example, in June Emory broke ground on a new health sciences research building that is jointly funded with Children’s Healthcare of Atlanta. The $79 million dollar project, nearly all gift funded, is scheduled to be completed in spring 2013 and will focus on pediatric research, adult cancer, immunology, and drug discovery.
Fiscal year 2011 represented another record for sponsored research funding, with awards of $540 million, an increase from the previous year, despite the decrease in funding from the federal stimulus programs. Emory’s research funding has increased an astonishing 52 percent in the past five years. This success is directly tied to the enterprising spirit of Emory’s faculty and research staff and to a sense of teamwork that crosses disciplines.
The new health sciences research building, located on Haygood Road, will serve as a welcoming beacon to those entering campus. Two stories of the research facility span the road and connect with Emory’s Children’s Center and the adjacent Children’s Healthcare of Atlanta facilities.
Emory also took strategic action to prepare for the evolving health care environment as well, expanding Emory Healthcare’s footprint in a rapidly changing metro-Atlanta market. In order to serve our patients better, Emory’s Board of Trustees approved moving forward with a new hospital bed tower on Clifton Road across from the current Emory University Hospital. This exciting project is scheduled for completion in 2016 and will improve Emory’s health care facilities significantly and support Emory’s goal to provide an ideal patient-centered experience. The new tower is expected to add 210 new beds, providing growth and enabling 82 older beds to be “retired” from the current hospital, for a net gain of 128 beds. The tower will include new operating rooms, ICU rooms, and additional underground parking. Deep appreciation goes to the Robert W. Woodruff Foundation for its critical support for the project.
Emory Healthcare also made significant progress to expand into the growing northern arch and suburbs of metro Atlanta. For example, during FY2011, Emory completed the full acquisition of Johns Creek Hospital, a 110-bed facility that Emory previously operated in partnership with HCA Holdings. In March 2011, Emory announced that it was entering a formal partnership between Emory Healthcare and Saint Joseph’s Hospital. The partnership, a joint operating company, will allow Emory to have a majority ownership interest in Saint Joseph’s, a long-established hospital in north Atlanta that shares our commitment to quality and innovative health care.
In FY2011, Emory continued to demonstrate the effective use of resources via internal partnerships. For example, Emory College established the Center for the Study of Human Health. The center united existing resources across the college devoted to the study of health, including the study of bioethics, history of medicine, and philosophy of health in the humanities; the study of global health, medical anthropology, and health economics in the social sciences; the study of predictive health in the natural sciences; and the Health 101 course required of all Emory students.
The global health minor and the predictive health minor are just two of the innovative new educational programs. The center makes Emory College a more attractive destination for students and faculty interested in exploring issues related to health, which is a significant percentage of our community, and makes it easier for students with such interests to explore the many avenues the college offers to deepen their engagement. These efforts demonstrate the kind of change that achieves both programming excellence and fiscal health.
Emory is also preparing for future administrative, workforce, and technology needs. In December 2010, Emory launched a multiyear, comprehensive project to look freshly and creatively at our organization of work, policies, and established practices through Emory’s Business Practice Improvement initiative (BPI).
The objectives for BPI include
• standardizing process, organization, service, and cost structures across the institution;
• increasing clarity of responsibility and accountability;
• eliminating non-value-added steps and reducing the number of people and organizations that touch a particular process; and
• concentrating elements of distributed departmental-based processes to regional service-center-based processes.
Though BPI is focused on improving the cost effectiveness of business processes, the Utility Reduction and Energy Conservation Agreement (URECA) is focused on the cost effectiveness of our physical assets. During FY2011 Emory completed the first step of a multiphased plan to retrofit campus buildings in order to improve energy efficiency and decrease water consumption. The first phase included five buildings and highlights Emory’s commitments to sustainability, green building practices, reducing utility costs, and ensuring that by 2015 we meet our larger goal to reduce energy use 25 percent per square foot from 2005 levels.
The five buildings include library, research, clinical, academic, administrative, and athletic space and represent one million square feet. The retrofit is expected to yield a 22 percent reduction in utility consumption, saving money for individual departments and schools. A second phase of URECA is under way.
Financial diligence will rise in importance across the enterprise. Our traditional sources of support will remain under pressure for the foreseeable future, meaning that new approaches and fresh thinking are required. In a year that included anniversary celebrations, there are also countless daily efforts under way throughout the Emory community to deliver in the present and prepare for the future.
This letter provides just a few such highlights, and I take this opportunity to thank the thousands of Emory faculty and staff who work each day to make Emory a world-class institution. We are fortunate to have many resources and a strong base from which to build and adapt for the future. The Emory community always has been and will continue to be the primary ingredient to our successfully delivering on the promise of the Emory mission.
Michael J. Mandl
Executive Vice President, Finance and Administration
August 31, 2011 and 2010
(With Independent Auditors' Report Thereon)