Archive for Monday, October 18, 1999


October 18, 1999


Kansas University Medical Center administrators say things are running smoothly since the hospital severed ties with the state a year ago.

A lot of numbers were considered a year ago when the Kansas University Medical Center officially changed from a state-run hospital to one governed by its own independent board.

The hospital's move for autonomy transferred $100 million in assets, involved more than 40 agreements between the state and the new governing entity concerning responsibilities and lease agreements, and cost the new hospital authority $7 million for new accounting, payroll and materials management systems.

But to KU Medical Center President and CEO Irene Cumming, the most impressive number was three.

Out of 2,200 employees offered a choice between keeping their state employee status or joining the hospital's payroll system, only three declined the jump. While the move didn't mean a change in salaries, job descriptions or benefits, Cumming said employees showed a lot of faith by joining the newly formed private hospital. It also meant agreeing to a new pay hike system relying more on annual job performance reviews than the seniority-based state compensation system.

"They were state employees, and just the connotation of no longer being protected by the state was a big step," Cumming said. "This was an unknown entity. They had to trust the leadership of the new organization, which obviously, they did do."

Sluggish bureaucracy

To the uninitiated, the birth of the new hospital governing system on Oct. 1, 1998, didn't mean much. The medical center -- also known as the KU Hospital -- at 39th and Rainbow Boulevard in Kansas City, Kan., still looks the same, and doctors still supervise medical students. But from the inside, it was as if administrators traded the keys to a station wagon for ones to a sports car.

"It was a bureaucracy," said KU Medical Center Executive Vice Chancellor Donald Hagen, who oversees the university's educational role at the medical center, from the schools of medicine, nursing and allied health to the research and graduate programs.

Hagen said shifting the hospital away from the state bureaucracy was sought even before he took control of the reins of the medical center four years ago. At that time, the hospital had to wait for the green light from the Legislature, whether it was buying toilet paper or planning new patient services and construction.

"We're not delaying cases or borrowing from other hospitals as in the past because we couldn't get stock in quickly enough," Cumming said.

In the world of health care, where companies have to be nimble in acquiring and selling off assets to keep ahead of cross-town competitors, KU Med Center wasn't on a level playing field.

"The marketplace for medicine in the country has really challenged the traditional ways for teaching and the traditional ways of organizing medical centers," Hagen said. "When you looked at the impact of having the hospital under the Board of Regents ... it was apparent there was need for a change."

As one of the 14 members on the authority board, Hagen has a vote in shaping the future of the hospital. He was one of the most vocal supporters of the transfer, despite losing half of his empire, -- Cumming took over his role as head of the hospital -- when the last papers were signed just minutes before the Oct. 1, 1998 deadline for the pact.

State laws barred Kansas University from borrowing money against the hospital's equity, even though patient revenues had paid off the cost of building the hospital. The operating costs of the hospital were totally supported by patient revenues, Hagen said, yet all the money went into state coffers.

"The hospital didn't get any interest on its own money," he said. "It was horrible. We definitely felt we had to do it. It had to happen."

The same roadblocks faced West Virginia University Hospital in Morgantown, W.V. After the teaching hospital, also known as Ruby Memorial Hospital, converted to a free-standing non-profit hospital in the mid-1980s, the wheels of progress turned faster.

"We had the same problems (KU Med Center) had, and to top it off, we had a facility that was in disrepair," said Jeff Jones, vice president of finance for West Virginia University Hospitals.

"Needless to say, we were never able to purchase new equipment and update our building," he said. "What exasperated that way back then was that if the hospital made some money a certain year, it would go directly to the state reserves. There was no way to save money to rebuild the facility."

Swift action

Cumming said the new authority board immediately began thinking like administrators of a conventional hospital, and just a month after the transfer was completed, KU Medical Center announced an agreement to purchase the TriSource Medical Group, a system of 11 doctors' practices.

Since then, the hospital has opened a new patient burn center, a pediatric pavilion and the KU Med West outpatient care facility in Shawnee.

Hospital officials are still beaming from their review by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) in June. That visit by JCAHO surveyors resulted in accreditation with commendation, the highest level of accreditation.

To receive Medicare payments, all hospitals must go through the accrediting process, but joint commission president Dennis S. O'Leary said the Med Center's performance was "a significant achievement" when the accreditation was announced in late August.

-- Chris Koger's phone message number is 832-7126. His e-mail address is

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