UofL and UMC File an RFP for a New Hospital Partner

The University of Louisville and University Medical Center Inc. seek a knight in shining armor to bail them out.

“Investing in and delivering healthcare services, education and research in conjunction with the University of Louisville and University Medical Center.”

The University of Louisville and University Medical Center, Inc. have jointly filed an RFP “to seek a business partner that will bring capabilities, experience, and commitment to include but not limited to: Critical Care, Facilities/Operations, Teaching/ Training and Research.

The following represents my initial thoughts as I read through the request for proposal (RFP) and the attached current Affiliation Agreement by which UMC operates University Hospital for the Commonwealth and the University. I apologize for typos and bad grammar. I am trading off timeliness for polish. I will attempt to clean it up in the days ahead. Because the timeline chosen by UMC and the University is deliberately and unduly brief, I would rather have something out there to work from then nothing at all.

Executive Summary
By way of an executive summary of my initial thoughts, shaped as they are by other recent events in our community, I offer the following.

The qualifications and criteria for judging responses to this RFP parallel exactly the justifications and solutions advanced at the time of the recently failed acquisition of University Hospital by Catholic Health Initiatives. I am having the feeling of déjà vu all over again. The extraordinarily short timeframe of action, together with the severely constricted avenues by which an external agency can gather information are not compatible with the due diligence that should be required of any third party not already intimately involved in the operation of the downtown medical center. The criteria for processing applications described in the RFP gives the University and UMC great leeway in whom they might select or refuse to consider. I cannot in my own mind come to any other conclusion than that this RFP was written solely with a single applicant in mind who has already signaled interest in close affiliation with University Hospital and with whom the structure of agreements has already been agreed. I cannot force the word, “sham,” from my thoughts. What a shame. I will be glad to be proven wrong.

The RFP process does not permit any public disclosure until after an agreement is signed. There is no recognition that any acceptance by the Commonwealth of Kentucky is required. The University of Louisville and UMC appear to have ignored any lessons they might have learned from the fiasco of last fall and winter. This community demanded the right to know what decisions were being made about their healthcare and by whom.

The rush to conclusion seems incongruous with the magnitude of the undertaking. I cannot personally ignore the conclusion that the haste is intended to allow documents to be signed before the Kentucky Appeals court has ruled on the issue of whether University Medical Inc. is a private entity free to do as it pleases, or whether it is an arm of the University and of the Commonwealth. What rational corporation would take on the responsibilities of this RFP without such determination made and finalized?

Many numbers are thrown out but fewer definitions and even fewer comparative data. An attempt is being made to compare our situation here in Louisville with other Academic centers around the country. This is justifiable and worthwhile, but cannot alone determine the direction our community should take. The current consultants to UMC have stressed that every medical center is different. We want ours to be different to. We want it to be better.

All the comments in this brief represent my personal opinions but I would like to think they are informed opinions. There is no one in Louisville more committed than I to the long-term survival of University Hospital as an ethical and excellent teaching facility, and for a healthcare support system for the underserved that is characterized by quality, dignity, and justice.

In my mind, the least positive implication of this rush to conclude a deal is that we will memorialize in stone for yet another generation, a segregated and second-class system of healthcare for those who do not qualify for mainstream medical services. The comments below are not mine, but I could not have expressed them better. A respected authority describes the system we have now in Louisville.

“If someone decides there are some hospitals in Louisville whose job it is to take care of the poor black and the marginalized and that it’s okay if they have to be kept waiting for a couple of weeks and it’s okay if the carpet is frayed, it’s okay if the phones don’t get answered, and it’s okay if the doctor is late, but there are other hospitals in Louisville where upper-class white people get taken care of by doctors who answer the phone on the first ring and smile a lot. There’s shag carpeting, and wood wainscoting on the wall. Was there a plebiscite … in Louisville where people voted and said they wanted to have segregated medical care? I don’t think so. But, there is a very strong theme that it’s okay for medical students and interns and residents to learn on poor people, but when you’re done, then you’ll be able to take care of private patients.”

Edward C. Halperin, MD
From: “Slave Medicine and the Banality of Evil.”
Gheens Foundation Lectureship,
University of Louisville School of Medicine, Feb 2, 2012

To participate in the above system of contemporary segregation is to participate in an evil.  I think it is time for a plebiscite in Louisville, and I trust that our citizens to favor a different set of priorities. Those decisions must not be made behind closed doors by a self-selected privileged few. The leadership of our University and our health care systems need to hear from all of us.

Peter Hasselbacher, MD

Analysis of RFP continued below.

Thoughts on first reading:

The proposal was dated yesterday, February 23, and is described as a “competitive negotiation.” this seems to me to give a high degree of discretion to the University in terms of selecting a new partner for its as yet undisclosed preferred business arrangement. [another acquisition or minority position, or something else?] Comments at the ad hoc committee meeting on February 21 reinforce this assumption. It was stated that the University is not obligated to consider specific proposals and can change time-lines unilaterally so long as changes apply to everyone. it was also stated that the RFP had been written but not yet released because “there is little side-negotiation going on with the result of the documents we signed during the merger process.”  No details were given to the UMC Ad Hoc Committee about the parties or content of the side-negotiations.  [If I were a prospective applicant, such comments would make me very nervous indeed.]

The deadline for responses to the RFP is a mere four weeks away on March 23. In my opinion this seems like a very short time unless the responder is already primed and ready to go. [Returning to this point after reading the entire RFP, the time periods allowed are entirely inadequate and can only be met by an organization with extensive internal knowledge of the operations of the downtown medical center. In my opinion, such a proposal would already have to be largely written. I cannot conceive that any responsible outside organization without such knowledge of the operations of UMC and the failures that have driven UMC to the point of having to ask for outside help would accept this massive corporate responsibility without the opportunity of additional time to prepare.

Blackout of public scrutiny.

In what may be standard state language, the proposals will not be opened and read publicly and the proposals and subsequent negotiation shall be held confidential until a final contract agreement is awarded at which time the file shall be made a matter of public record and may be reviewed by any interested party. The rules of the RFP process allow the University to continue its planning in secret. Being able to operate in this blackout was a point emphasized at the February 21 Ad Hoc Committee Meeting. The University is still uncomfortable or unwilling to operate in view of the public. In my view, this posture led to the failure of their earlier merger effort.

Item 1 is an affirmation by the proposed vendor that the RFP has been submitted without collusion, without any agreement, understanding, or planned common course of action … designed to limit independent competition. Kentucky one health has expressed interest in an ongoing relationship with the University. Such an affirmation as above would seem to me to be impossible to make given that they have been planning a common course of action with the University for the last two or three years. If I were an interested outside vendor, I would not bet very much on my chances.

The Proposer must affirm that it is not in any violation of prohibited conflict of interest. I have no idea what this means, but the opportunities for conflict of interest are immense.

Page 3.
“Any submissions will be jointly evaluated by the University of Louisville and University Medical Center.” I heard UMC state that it need not comply with state contracting procedures and that it was participating only in partnership for this submission. If UMC is truly a private entity as it claims to be, is it appropriate for it to be evaluating an RFP of the University of Louisville which does have to follow the rules? Indeed, I still have to admire the audacity of the University to proceed as though it will succeed in its legal challenges to the determination that it is not a private corporation. In that setting, the unseemly haste to rush this project and the Hospital’s own internal review appear designed to allow it act before the court appeals process is completed. I would personally be ashamed to be operating in that way.

Objective of the RFP:
The objective of this RFP is to seek a business partner that will bring capabilities, experience, and commitment to include, but not be limited to critical care, facilities/operations. Teaching/training and research.” These are of course the responsibilities of any medical school or academic medical center. What does it say that the University cannot manage these things on its own?

Page 4.
From the date of the RFP, the Proposer’s sole point of contact is a University purchasing agent. It beggars the imagination to assume that no one from KentuckyOne Health will not have discussions with University of Louisville personnel over the next two months. These organizations have been negotiating constantly for the last few years specifically with respect to a merger as outlined in the RFP.

This prohibition on communication is only between the proposer and any potential responder. I am not aware of any prohibition of either party in disclosing details to the general public, but I am not optimistic either.

Page 5.
This RFP form seems designed for state purchase of goods as opposed to higher level services. I do not know how this will affect the results. An RFP was used for previous iterations of University Hospital’s management contracts.

Page 6.
The award is going to be made based on “best value” proposal to the University and UMC. Since this RFP is not going to deliver a price per unit purchased, or mile of highway paved, there will be a paucity of objective measures on which to make a decision. My belief is this is going to be more of a “beauty in the eye of the believer” decision.

Page 7.
“The University and UNC reserve the right to reject any or all offers and to wave informalities and minor irregularities and offers received.” [The University and UNC are operating here as one entity and are giving themselves pretty much a free hand.]

“A written award or acceptance shall be deemed to result in a binding contract without further action by either party.” [Comment: There is no explicit provision here for the possibility of acceptance or rejection by any agent of state government.]

The University reserves the right to enter negotiations with a second highest evaluated proposal or cancel the original RFP at its discretion.

There is a contract period of five years with the option to renew. [That seems rather short given the potential magnitude of the reorganization that will certainly occur.]

Page 8
A pre-proposal conference will be held on February 28, a mere two working days following the availability of the RFP. How can this be interpreted as anything other than an attempt to minimize the number of responders? How is it humanly or even super-humanly possible that this meeting will “assure that all bidders will have a complete understanding of the scope of this project.”

Another rebuke of public of Louisville, “no transcript or report of the pre-proposal conference will be provided.

A tour of the UMC campus will be provided by the chief executive of University hospital. “Please note that questions or specific personnel meetings will not be addressed or be made available during any site visit and should be submitted as per instructions contained within this RFP.” Comment: how can a reasonable application be made by anything other than an existing partner when exchange of information is so deliberately restricted?

Any complaints of a prospective bidder are adjudicated solely within the administrative structure of the University of Louisville. The Associate Vice President shall be the final action on behalf of the University. There is no mention of any supervision by any state agency other than the University.

Page 9.
The conflict of interest statement applies only to the owner of the bidding firm if they are related to a University of Louisville or UMC employee. This is an extraordinarily narrow prohibition. The relationships between KentuckyOne Health and the University are extraordinarily extensive and include individual financial relationships with faculty members. Since it is likely that Kentucky one health will be an applicant, such a relationship is rife with potential conflict of interest. Neither the interest of the Commonwealth, the University, nor the public are sufficiently protected. This limitation is inherent in the (inappropriate) use of this RFP format for such an academic undertaking.

Item 1.32
Disqualifies any applicant who has “ever been charged with or been convicted of a criminal offense related to the provision of government healthcare, and have not been reinstated in such programs.” [Are there any hospitals in Kentucky which have not been charged?]

Page 10.
In its background information, it is said that the U of L Health Sciences Center is the city’s only academic medical center. Unfortunately this is no longer technically the case. Norton Hospital now has an affiliation agreement with the University of Kentucky and UK residents rotate in that hospital. There is no question of course that UofL has the largest academic presence in Louisville by far. In my opinion, it is a crying shame that the three major downtown hospitals allowed their working relationship to deteriorate to the point that University Hospital feels compelled to reach out into the state for partnerships with hospitals that are not nearly of the caliber of our Louisville institutions. All of us allowed this to happen, and all of us are to blame.

The claim that UMC is a private nonprofit organization is hammered home again. The Medical Center brings attention to its traditional headline services, its trauma center, its burn unit, and its certified stroke center. It also draws attention to its cancer center.

Item 3.
There are some three pages outlining the financial and operational structure of University Medical Center Inc. (UMC). They are asking for help in sustaining and enhancing the facility to provide high-quality health care, and to enhance competition by enabling the hospital to compete effectively with for-profit and not-for-profit hospital systems that have developed regional networks. Other items from the affiliation agreement relate to sustaining and enhancing the University’s education and research, to provide a stable mechanism for providing indigent care and affordable healthcare to the public.

In a separate paragraph special attention is called to providing and funding healthcare to the uninsured and underinsured. Emphasized again is the noteworthy and unique mission of University hospital to support the University of Louisville’s education and research missions. [I would like to hear a little more discussion about why the hospital should be supporting education and research of the University of Louisville when it cannot meet its primary obligation to provide clinical services? Which is more important, and which should be fixed first. I would argue that the constant bleeding off of financial resources from University Hospital has played a major role in apparently bringing University Hospital to its knees to the point of being forced to ask for outside help.]

Page 11.
Last year, University Hospital supported the salaries and benefits of 241 residents with a cost in excess of $16 million. [That averages to $66,390 each.] Left unsaid is how much of that expense was reimbursed by federal and state governments through graduate medical education payments by those entities.

A significant, but unstated level of financial support is given to the school of medicine and faculty.

The QCCT trust provides funding of $34.8 million yearly to cover indigent care. There is no mention in the RFP of the original reciprocating agreement by Humana to cover the remainder of indigent care funding if the governments continue to make their contributions. This obligation remains explicit in the current Affiliation Agreement. (The Affiliation Agreement does make it clear UMC is responsible for any remainder.)  I would ask the question of why UMC was and is still giving money to the University of Louisville if it feared its ability to fund indigent care was compromised. [Public discussion would be clarified if we were given definitions of charity care, indigent care, uncompensated care, uninsured patients, and the like. These do not all mean the same thing.]

It is said that 25% of the patients seen at University hospitals do not have health insurance. Actually that is less than I expected. According to my own recent calculations, 72% of University Hospital patients were covered by Medicaid or Medicare. That left 28% not covered by federal health insurance, but that was only for inpatient bed-days. If my estimated numbers are even close, few privately insured patient go to University Hospital! I would like to see more authoritative data on the payer mix of our community’s hospitals, and the distribution between inpatient and outpatient services.

The proposal makes the claim that teaching hospitals provide a disproportionate amount of free care. My analysis does not necessarily support this commonly accepted claim. Of course University Hospital provides substantial indigent care of which it can be proud, but it appears to be right in the middle of the pack in terms of indigent care as a function of teaching hospital intensity, at least as measured for inpatient care and Medicare’s proxy for indigent care. The public should be allowed to see the data UMC is referring to.

We are told that Council of Teaching Hospitals data shows that University Hospital’s charity care charges to be 22.6%. The definition of charity care should be specified, and we and the potential RFP respondents should be allowed to see the data too. The most frequent definition is of charity care is that which is provided to patients for whom no expectation of payment is present and who will not be sent a bill. I would also want to know if QCCT money is applied to such charity care. If so, it wouldn’t be charity care!  It may well be true that University Hospital’s charity care is high compared to other teaching hospitals, but the vast majority of teaching hospitals do very little charity care at all. A more fair comparison would be with other large urban teaching hospitals. University Hospital does plenty, but it does not need to exaggerate how much.

It is claimed that University Hospital provides 62% of hospital based charity care in Louisville. Whatever it is, it is a lot. Norton probably provides the bulk of the rest at Children’s hospital. Some Louisville hospitals probably do very little indeed.  My question is, why is University Hospital being asked to do so much when there are so many other empty hospital beds in Louisville?  (I have some ideas how to balance out the responsibility!)

When University Hospital talks about its emergency room, burn center, inpatient psychiatry, it is talking about those services that typically lose money for all hospitals. It is a shame that the medical community of Louisville has been structured to offload these important but unprofitable services to University Hospital. No wonder UH is staggering. Either share the load more fairly, or pay for it in other ways. Neither the City of Louisville nor the Commonwealth should be insisting that UH do it all by itself and without adequate support. It is a shame that the University feels it has to reach outside the city for help.

A claim of $150 million in community benefit is made. I’ve no idea where these numbers come from. The claim is made of $75 million of charity care at cost, and 56.7 million towards health profession educations. These numbers are misleading because millions of dollars are also provided by the federal and state governments in support of these activities. There is no need for University Hospital to exaggerate its contributions. It would be nice to see some detail instead of unsupported claims. The RFP responders deserve more too.

It is correctly stated that University Hospital has a closed medical staff. It is also emphasized that university faculty have long admitted their private and paying patients to competing hospitals. In my eye, and that of the prior managers, this abandonment of University Hospital by its faculty has contributed to its inferior position today. This reality cannot be ignored in public or private discussions.

The proposal emphasizes that the previously fragmented faculty private practices are being consolidated. It is my understanding that this consolidation is not yet complete. If the faculty were required to admit their patients and otherwise support University Hospital, perhaps there would be no need for a merger.

Page 12.
It is correct that University Hospital status has suffered by its relationships with its adjacent and competing hospitals. Is also true that University has played one off against another and contributed to its present predicament. There is plenty of blame to spread around. If the hospitals had played together better we would be facing a different reality today. Their inter-nicene warfare has not served the community well.

The claim is made that UMC is governed by a Board of Directors that is not affiliated with the University of Louisville. Simple inspection of the members of the Board of Directors belittles this claim. The state attorney general didn’t believe it either. It’s part of the reason that the Atty. Gen. has ruled against UMC’s claim to be a private entity.

Some attempted justification is given for the fact that University Hospital transfers much money to the medical school. It is also acknowledge that university faculty receive compensation from and have duties outside of University hospital. The extent to which conflict of interests naturally arise from these relationships is not discussed but should be.

I will not quarrel with their argument that operating a hospital in these times is quite challenging.

It is stated that “most” of the physician faculty of the clinical departments practice or intend to practice in a combined but independent and separate faculty practice group. There said to produce an estimated $86 million in net revenue but I have little confidence that this number reflects total revenues.  Faculty private practice income has always been a secret.

Page 13.
Here is where the specific criteria for evaluation of the RFP are stated.

5.2
Investment in development and expansion of clinical programs through academic affiliation agreements.

Building a statewide healthcare delivery network.

Designation of universal global clinical programs that will use faculty as preferred providers [this was supposed to be one of the goals of UMC when Jewish and Norton were partners. University Hospital was supposed to get some of the good stuff. It never happened. What entity that controls a statewide healthcare delivery network is going to be willing to make such a promise at this time.]

Providing care for the underserved and disadvantaged while maintaining growth of available clinical services. [The request does not speak of creating new programs.]

It seems to me by requesting these clinical care supports; University Hospital is admitting that it has failed abjectly. What entity, other than one with little to lose, would promise to do these things without understanding why things are claimed to have gone so badly wrong? How could such understanding flow through the limited contact point of a purchasing agent at the University of Louisville business office. What non-desperate entity could complete the required due diligence of such a massive project in such a short time? It can’t be done. Only an institution with an intimate and long-standing knowledge of University operations and partnerships would be justified in committing their institution to making such promises.

Nothing is said about improving the quality of medical care delivered by University Hospital. Its current objective measures in Medicare’s Hospital Compare a not so good. University needs to get its basics done right before it takes on the world.

Nothing is said about the current lawsuits about the independent nature of UMC which would have a marked effect on future operations. Indeed a skeptic might believe that the unseemly rush to accomplish this process is to beat the appeals court to its punch. [include me among these numbers.]

The criteria are so vague and the information provided so vaguely general that I cannot imagine the motives that might induce some outside heavyweight to ride in on a white horse and save the day.

The proposal is cloaked in doom and gloom. What outside vendor would tackle this project without the community coming together beforehand with a sustainable plan to finance its own indigent healthcare responsibilities?

Item 5.3.
The proposers must enter into a joint operating agreement that gives UMC sufficient autonomy to provide regional safety net hospital services and maintain accreditation of the school.

They must have demonstrated financial strength and stability.

They must make a capital investment in UMC maintenance and operations.

They must achieve operational efficiencies and savings. [To me that is a request for a merger in fact or form.]

They must help prepare for the new accountable care organizations environment.

Item 5.4
The proposer must provide resources to recruit and train health care added educators. [I suspect this would also include healthcare researchers.]

They must provide resources to train the next generation of doctors.

They must boost the status of the nursing school.

They must embrace interdisciplinary healthcare training.

They must embrace cutting-edge teaching and training technology.

[These above items are the principal responsibility of the University of Louisville and its health science schools. If they haven’t been able to do these things, they should consider turning the responsibility over to a University that can.]

Item 5.5 Research.

The proposer will provide resources to do research.

The proposer will expand the university’s ability to do clinical research across the state.

The proposal will develop health services research.

[Is the University really asserting that it has failed to succeed at all these things? The question all of us should be asking is how was this allowed to happen?]

The weighting of the evaluation criteria is one third clinical care, one third facilities and operations, 20% teaching and training, and 14% research. A pre-proposal conference is scheduled two working days from the date of availability. Proposers have three working days to submit their questions and one calendar month from yesterday to submit their proposals. An intent to seal the deal is scheduled for the week of April 16. [I maintain that given the scope of this project, these timelines are woefully inadequate. The cynic in me must believe that this is intentionally so, and that only a bidder with a known identity and long-standing relationship, indeed with pre-existing application could possibly produce a meaningful submission. The single question that I cannot keep out of my mind is, why is not all this a sham? All of this will be done under the cover of a community blackout. Once again, the community will not be told of what arrangements have been made until the papers have been signed.

Overall Impressions to This Point:

A broad range of support is requested. UMC wants to enter into a joint operating agreement in which UMC retains sufficient autonomy to provide indigent care and maintain accreditation of its training programs. This was a requirement of the Governor and Attorney generals evaluations. However the applicant seems also expected to enter operating agreements or joint ventures with the University that will broaden the scope of assistance requested, but which are unrelated to indigent care and teaching. Which is more important? It seems to me the whole push behind this effort should be to maintain the ability to provide high quality clinical services. Why then should a bidder be expected to provide huge resources to the University. Does the University continue to expect its hospital and health sciences Center to be a cash cow to support the rest of the University?

How does University Hospital come out ahead in this? Support of existing programs is requested. A request for selected UofL clinical programs as preferred network providers is made. Will these be services other than those already in place? Or will instead profitable services continue to be siphoned away from University Hospital perpetuating the segregated system of indigent care we have tolerated for too long.

One need not have a good memory to recognize that the parameters and justifications of this RFP are exactly those advanced by the University and by Catholic Health Initiatives in their recent attempt to form a merger in which the University Hospital would be a minority player subject to outside control in both clinical and academic affairs. Perhaps the University and CHI have been able to modify their agreements such that it could pass muster by the Commonwealth. More power to them.  Given some of the hardline statements made by our local bishop and leadership of CHI, how could such accommodation even be possible? Perhaps the University and whatever applicant comes forward believe they could sign their deal without the approval of the governor and Commonwealth.  Even if it were legal, would it be wise?

Peter Hasselbacher, MD
President,
Kentucky Health Policy Institute
Feb 24, 2012

Comments on the Current Affiliation Agreement.

It is clear that much of the RFP has been taken directly from the existing affiliation agreement between the University and the state and UMC signed in 2009.

Page 2.
The inventory care building is defined excluding clinical and academic certain space reserved for the University.

The current QCCT agreement with the University apparently incorporates the agreements with the previous operator, Galen.  The current operating agreement emphasizes trauma, the need for additional academic space, new programs to benefit the community and hospital, addressing indigent care that is funded by the QCCT. An appropriate method to provide primary health care, closer integration with Jewish Hospital and Norton, development of primary care practices, and the development of an integrated informatics system are included.

Page 7.
The operating agreement permits University faculty to admit patients to any downtown medical Center hospitals..

Page 9.
All patients admitted to University Hospital shall be considered medical teaching patients. [This is what it means to be a major teaching hospital.]

Page 10.
UMC is responsible for the operations of the hospital and will be entitled to all revenues and liable for all expenses. Any surplus will either be reinvested in the operation of the hospital or distributed to the University for enhancement of its programs. [What proportion of historical surplus has been reinvested, and what proportion siphoned off to the University?]

UMC charges no management fees to the University for it’s services in the agreement. [But the University can charge rent for the use of its facilities!]

UMC bears responsibility for all losses resulting from the operation of University hospital. This was the original agreement made with Humana.

The University promises to present a statement of the use of funds that it receives from University Hospital, but is not prevented from changing its use of the funds due to changed circumstances. University will report to the UMC board the status of programs funded with surplus cash flow.

UMC promises to make necessary ongoing capital expenditures.

Page 11: Facilities enhancement.
UMC promised $35 million a year to the hospital for the first year with an additional 5 million in the second and third years. No further commitments were made. [This was enough to make the University leap at the opportunity to place itself under the partial control of Norton and Jewish hospitals.]

Page 12 Indigent care, QCCT.
The principal funding for indigent care shall be the QCCT for both inpatient and appropriate adult outpatient services. UMC or the University may terminate the agreement if the funds are not provided as agreed. “Assuming that the QCCT is fully funded by the government contributors… UMC shall accept full financial responsibility for providing medically necessary indigent care to adults at you LC in excess of amounts available from the QCCT to fund such indigent care.”

Page 14. Financial reports and accountability.
UMC is supposed to deliver reports to the University and Commonwealth at the close of every month and year. [I suppose these reports should be available.]

Item 17.3. UMC will report yearly on any payments made by UMC or its affiliates to University faculty or employees or any entity under the control of or for the benefit of University employees or faculty. [This is a report I would like to see.]

Item 17.7. University Accounting.
The University promises to provide UMC with a summary of expenditures by University of funds received from UMC. [has anybody ever seen any of these reports?]

Item 21. UMC contributions to QCCT.
To subsidize the operations of the ACB clinics UMC will make available in the first year of operations at least $1 million of QCCT annual funding this number rises somewhat in the next five years. This is not the same $1 million that UMC returns to Louisville city government every year from the QCCT funds. [I don’t know what that latter arrangement is about.]

Item 22. Faculty practice plan.
University has right of prior approval of all agreements between any member of the faculty and UMC or any affiliate or party acting on UMC’s behalf including network participation agreements, clinical practice agreement, or insurance, provider or capitation products. [I was certainly unaware of this. I have no idea how long it has been in the operating agreement. The University never had this degree of control.]

Page 19. Litigation.
University agrees to identify any pending or threatened litigation, arbitration, governmental investigation or other legal, administrative or tax proceeding etc. that would impede or prevent the consumption of the transactions contemplated by the agreement. [No mention is made of the ongoing litigation in this RFP.]

Page 21. Terms and termination.
Initial term was for 15 years from 2009. The agreement shall automatically renew for up to three successive five-year periods without notice of termination. The signatories are the Commonwealth of Kentucky, UMC, and the University of Louisville.

Item 30.1 Assignment, change of control.
During the term of the agreement neither UNC nor University shall sell, transfer, or assign (including by operation of law) its interest in the hospital without the consent of the other, subject to the Commonwealth’s right to transfer the hospital to another state entity, provided that the shall not reduce UMC’s rights hereunder.

None of the parties shall sell transfer or assign including by operation of law its interest in this agreement without the prior approval of the other parties.

Peter Hasselbacher, MD

Emeritus Professor of Medicine
University of Louisville

President,
Kentucky Health Policy Institute
Feb 24, 2012

Download the RFP (PDF 168K)   and the Affiliation Agreement (PDF 2.2MB).

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