Editor’s note: Earlier this month, Irene Cumming, president and CEO of Kansas University Hospital, gave the hospital’s medical staff the following update on affiliation discussions between the hospital and KU Medical Center.

As you know, in March, the university and hospital agreed to guiding principles for an affiliation, which is to serve as the road map to an affiliation agreement. These guiding principles and the affiliation agreement will serve to align the hospital, the physicians and the School of Medicine in a way that I believe will provide better opportunity for future success for the clinical enterprise and the school despite the proposed affiliation with St. Luke’s Hospital. The alignment provides an increasing share of hospital resources for the physicians and the school tied to hospital revenue growth.

It was agreed that we would enter into definitive agreements by May 31 based upon these guiding principles. Unfortunately, the progress between the university and the hospital has slowed since the signing of the principles. It slowed further after the governor vetoed the provision passed by the Legislature that would have required the Hospital Authority Board and the Kansas Board of Regents to approve any affiliation agreement between the university and St. Luke’s Hospital.

I find that instead of converting these guiding principles into a definitive agreement, we are renegotiating areas where we already believed that we had agreement with the university.

One of the major goals of the guiding principles is to strengthen the physician practice and provide a basis for a stronger partnership between the physicians and KU Hospital. I have heard some suggest this is a takeover by the hospital. It is far from a takeover and more a platform for partnership for success of both entities. The hospital has no desire to take over the practices but to find a legal means to share revenue, growth and success to support the clinical, research and education missions of our campus.

The hospital strongly believes that the physicians should be fairly compensated for their work and should have a workplace to support their success. This is why there is money in the principles from the hospital to the physicians to increase base compensation to market rate and there is a timeline for building of the medical office building. Both are major objectives of the hospital. Only with a strong physician practice and strong hospital, can we meet the expectations of all entities.

The guiding principles also increase significantly the transfer of funds from the hospital to the School of Medicine to ensure that there is an increasing amount of unrestricted funds for the school to further develop its research agenda. The increased funds, which is at least a $12.5 million increase over FY 2007’s amount of $30 million, will be the initial investment made by the hospital to support the future of the physician practice and the school. The amount will increase annually as the hospital’s revenue increases.

I am quite discouraged over what appears to be delays on the part of the university to finalize the definitive agreement. Dr. Barbara Atkinson (executive vice chancellor of the KU Medical Center) advised me and a legislative group last week that she did not believe that the agreement could be finalized by June 30.

Although the governor vetoed the first proviso of the Legislature, a second proviso has been presented which says that the university and hospital must complete their affiliation agreement before the university can implement the St. Luke’s affiliation. It is likely again that the governor will veto this proviso. (Sebelius vetoed the proviso Monday.) This is unfortunate because this proviso would have put needed pressure on both the hospital and the university to come to some agreement to ensure the success of our clinical enterprise.

The hospital remains supportive of the life science initiative. The hospital has always questioned why there is a need for expansion of education to St. Luke’s to accomplish this initiative. Nevertheless, in good faith, I committed to the governor and (Kansas City businessman) Irv Hockaday in December that we would develop a way to mitigate the risk to the clinical enterprise of such a St. Luke’s affiliation. That is what the guiding principles represent. That is what the definitive agreement would solidify. It remains puzzling to me why that is not sufficient.

KU Hospital is a financial engine for this entire enterprise. Putting it at risk places the entire campus at risk. It puts the state at risk if the hospital cannot continue to support the high level of uncompensated care. It puts the basic science efforts at risk if the hospital cannot continue to support the clinical enterprise.

The Senior Team, I and the board are continuing to focus on meeting our commitment to develop definitive agreements by May 31. It will be up to the university to be a willing partner to secure the future of our clinical enterprise.

In an effort to continue to meet our commitments, we have scheduled a board meeting on May 29 at which time the board will review and be asked to consider approving definitive documents which follow the guiding principles.