Topeka ? Kansas University Hospital and the clinical practices of the physicians who practice there are on the verge of a major reorganization, a move made necessary by rapid changes in the health care marketplace.

But officials told the Kansas Board of Regents Wednesday that even those changes may not be enough for the hospital to continue growing if Kansas doesn’t take advantage of the Affordable Care Act by expanding Medicaid.

“To the outside person, you will probably notice nothing. But this is a massive reorganization,” said Doug Girod, executive vice chancellor of the KU Medical Center, the university’s school of medicine.

Currently, the hospital and the university’s medical school operate as two separate entities, even though they are physically located in the same facilities in Kansas City, Kan.

Bob Page, president and CEO of the hospital, said that arrangement dates back to 1997 when KU Hospital was a poorly rated facility on the verge of financial collapse. He said consultants advised the university at the time to consider either closing the hospital or selling it to a for-profit corporation.

Instead, Kansas lawmakers passed a bill allowing KU to spin off the hospital as a separate entity governed by a 19-member KU Hospital Authority. That freed the hospital from many of the constraints that came with being a state institution, giving it more flexibility to make purchases, sign contracts and pay vendors the way any private hospital would.

In the 17 years since then, Page said, KU Hospital has grown to become one of the premier hospitals in the country and is now known as a “destination hospital” that is ranked nationally in several medical practice areas.

During those years, though, the health care industry went through significant change, including a shift away from hospital-based care to more outpatient services.

In response, the teaching faculty at the medical center established clinical practices. Girod said there are now 18 separate clinical organizations, one for each academic department, each organized with its own foundation and board of directors. And those 18 nonprofit corporations are organized under the umbrella of Kansas University Physicians, which has its own foundation and board.

Between now and July 1, Girod said, all of those organizations will be merged into a single organization under the auspices of the KU Hospital Authority, which will continue to operate with a 19-member board, most of whose members are appointed by the governor.

He said the change will enable the hospital to shift toward a new model for medical treatment where patients are seen by teams of doctors from various disciplines. And it allows the whole organization to operate more efficiently by streamlining billing, record keeping and other functions.

“The complex structure that I shared with you is really not sustainable for us, and we’ve known that for some time,” Girod said.

But even with those efficiencies, Girod said KU Hospital, as well as most other hospitals in Kansas, face a huge financial challenge because of changes brought on by the federal Affordable Care Act, also known as Obamacare.

That law expands coverage to more people through Medicaid and subsidized private insurance sold through state and federal exchange markets. The cost of that expansion is partially paid for by reduced payments to hospitals through Medicare, the federal health insurance program for the elderly.

Girod said the tradeoff was supposed to be neutral for hospitals because they would see huge reductions in the cost of uncompensated care for people without insurance.

But because Kansas has chosen not to expand Medicaid, hospitals throughout the state are seeing the reduced Medicare reimbursements, but no reduction in the cost of uncompensated care.

In fact, he said, uncompensated care is rising faster in Kansas than any other state.

“If you look at California or Washington (two states that have expanded Medicaid), their uncompensated care rate is now down below 3 percent,” Girod said. “The state of Kansas actually grew faster than any other state in the United States last year, over 12 percent growth in uncompensated care in this state.”

Page said KU Hospital lost over $100 million in Medicare reimbursements last year and expects to see another $95 million in cuts over the next five years. Meanwhile, he said, uncompensated care at KU Hospital totaled $59 million in 2013.

Gov. Sam Brownback has said he does not want to expand Medicaid in Kansas because he doesn’t believe the federal government will be able to continue paying for it in future years, and that would dramatically increase costs to the state.

The Kansas Legislature passed a bill last year prohibiting the governor from expanding Medicaid without legislative approval.