Finance and Administration - Board of Trustees - The University of ...

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Finance and Administration Committee - III. Minutes of Last Meeting1Medical Group. Yes, all of the West Clinic’s assets and debt are transferred tothe Methodist Hospital System. The University of Tennessee has no debts orcharges that are accrued to us. Trustee Ferguson then asked if the letterheadon people’s paychecks – are they working for the same people or differentpeople. Chancellor Schwab replied that the physicians in the West Clinic thatmove from part-time to full-time faculty status will get a paycheck from theUniversity of Tennessee for their services. Total payments to the group isabout $500,000 because they are forming a PSA opposed to being absorbed byMethodist – the checks will still say West Clinic was his understandingbecause they are performing physician services organization and they are notbecoming integrated as Methodist employees.President DiPietro commented that he recalled at the Board Workshopthat Trustee Foy voiced his concern about branding and the ability to useyour brand. That is exactly what Chancellor Schwab is doing here by sayingwe are affiliating our name, with our doctors and your place and taking careof people. There is value in that and is asking for a return on the value of thatUT physician taking care of patients and curing their oncologic problems.That is the model in place because we don’t have a hospital that we operateourselves. Chancellor Schwab said that is correct. President DiPietro addedthat other places have done that such as Washington University. Dr. Schwabnoted that as the President pointed out that we are not reinventing the wheel.The fact that we have large market share in terms of taking care of a largenumber of patients in these systems and the fact that national healthcarepolicy has changed and now facilitates integrated bundle care if you are abusiness person and penalizing piece mill care; by forming these groups thatcan deliver the complete cancer care bundle and you can contract with thisentity for complete services – one contract – one service. If you are aninsurance provider, it would clearly be an advantage. Not only by theinsurance industry but also by the federal government to form these types ofaccountable care organizations. Suddenly there is an entity that can be heldaccountable for the care of these patients in the terms of their cost andoutcomes. The net result for us is that we will deliver better care while thelarger patient population for research will get more physicians fees becauseour surgeons will do more cases. We will need a lot more surgeons and theWest Clinic becomes our practice arm as a result of our willingness to sponsorthis and we receive a minimum of $5 million per year. Chair Talbottcommented that he thought it was remarkable what has been done but hisworry is that there is a “gotcha” somewhere on these documents that arebeing signed. He cautioned everyone that the University does not take onliability that is in the agreements that we haven’t read. Chancellor Schwabreplied that he thought that was an appropriate cautionary admonishmentbut General Counsel, Catherine Mizell, has been through these documents1921
Finance and Administration Committee - III. Minutes of Last Meeting1many times. The University is very careful with liability and we do notbelieve that we are accepting any new liability with this agreement. GeneralCounsel Mizell interjected that the documents have not been drafted yet.Chancellor Schwab explained that he only meant to say the General Counselhas reviewed the letters of intent and that UTHSC is seeking permission to goforward to work with the General Counsel, the President, and the ChiefFinancial Officer to execute these documents in the near future. Chair Talbottconfirmed that General Counsel Mizell will have oversight on any documentssigned that we do not have liabilities that could get us. Trustee Horne asked ifthe University did get in a hospital arrangement at some point could wecancel these agreements with a year’s notice. Chancellor Schwab explainedthat it was a five-year deal and the infrastructure to get into the cancer carebusiness is hundreds of millions of dollars. Should we want to transfer ourcancer book of business some place other than the Methodist System; therewould have to be a way to make more money, a huge investment to get theinfrastructure here. It would require three radiation therapy vaults, hugenumber of operating rooms, gamma cameras, hundreds of millions of dollarsin resources that the Methodist System now has. If we were to switch it,someone would have to have the infrastructure. Trustee Horne confirmedthat it was a five-year commitment and Chancellor Schwab said that iscorrect. Trustee Hall complimented Chancellor Schwab for his initiative andfor our new Trustees noted that this proposal came out of a situation thatdeveloped with the UT Medical Group that was a great concern to theLegislature and General Assembly. A significant amount of money that wasnot being paid to the State of Tennessee so the Audit Committee undertook areview of the relationship and brought in an outstanding group, ECGManagement Consultant. The information is in the materials. These practiceplans that are being initiated were the strong recommendation of this outsideconsultant group as a result of the fact that we do not have hospitals that arebranded with the University. This is the direction that other majoruniversities have taken that are in similar circumstances. Chancellor Schwabnoted that Trustee Hall’s comments were well said. Most major academicmedical centers of our stature own their own hospital. There are notable onesthat are in the same boat as we are but Washington University in the mostprominent. It is a top-5 university and located in St. Louis and is affiliatedwith Barnes-Jewish System. Their agreements look a lot like theseagreements I believe, obviously I am not privy to their agreements. WakeForest University and the Baptist Hospital have similar agreements inWinston-Salem, North Carolina. We believe this is the absolute best that wecan do without owning our own healthcare system.Chair Talbott informed the Committee that it was an action item and calledfor any questions, there were none. Trustee Anderson moved approval that2022
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