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Meeting Information

HEALTH AFFAIRS COMMITTEE

Friday, May 29, 1998
8:30 - 9:15 a.m.
East Oval Room, The Rotunda


Committee Members:

Charles M. Caravati, Jr., Chair
Terence P. Ross
William G. Crutchfield, Jr.
Albert H. Small
William H. Goodwin, Jr.
Joseph E. Wolfe
T. Keister Greer
John P. Ackerly, III, Ex Officio


AGENDA

I.A. Approval of Conflict of Interests Regarding UVA/Health Services Foundation Contracts

BACKGROUND: The University of Virginia Health Services Foundation (HSF) was organized in 1981 as the clinical "faculty practice plan" for the physician faculty members of the School of Medicine. The purpose of the Foundation is to support medical education at the University and to help attract and retain highly qualified University faculty by establishing a group practice, within which faculty may provide clinical services to patients and train medical students.

DISCUSSION: Clinical faculty in the School of Medicine are employees both of the University for their teaching, research and administrative work, and of the Foundation for their clinical practice. Because they are paid by HSF for their clinical work, the School of Medicine clinical faculty have a "personal [i.e. financial] interest" in the UVA/HSF contractual relationship as defined in the Virginia State and Local Government Conflict of Interests Act. The Act generally prohibits a state employees having a "personal interest" in contracts between his state agency employer and any other entity from which he receives compensation. An exemption is made, however, by section 2.1-639.6(C)(6), for personal interests of faculty in contracts between state schools of medicine and their faculty practice plans, subject to approval by the schools board of visitors on or after July 1, 1998.

The following resolution approves the personal interests of School of Medicine faculty arising from their clinical income interest in HSF, which serves the University as its group practice plan.

ACTION REQUIRED: Approval by the Health Affairs Committee and the Board of Visitors.

APPROVAL OF CONFLICT OF INTERESTS REGARDING UVA/HEALTH SERVICES FOUNDATION CONTRACTS

The President will propose the adoption of the following resolution:

WHEREAS, the Virginia State and Local Government Conflict of Interests Act permits and exempts personal interests of medical faculty in contracts between a state institution of higher education which operates a school of medicine and its physician faculty practice plan (the group practice organization through which faculty conduct their clinical practice); and

WHEREAS, the Universitys faculty practice plan, the Health Services Foundation, supports the Universitys medical education programs by serving as the group clinical practice organization for the School of Medicine faculty, allowing them to maintain and convey their skills to medical students within the Medical Center and related clinics, and by providing compensation that helps to attract and retain highly qualified faculty;

RESOLVED, as permitted by the Act, the Board of Visitors hereby approves the personal interests of School of Medicine faculty arising from their clinical income interest in the Health Services Foundation, which serves the University as its group practice plan.


II. Medical Center Compensation and Benefits Program

BACKGROUND: The Board of Visitors in June of 1996 adopted an "interim" Medical Center Personnel System as part of the Codified Autonomy legislation to allow management the opportunity to develop a Personnel (Human Resources) System aligned with the health care industry. The "interim" Personnel System mirrored the Personnel System of the Commonwealth. The Medical Center retained the human resources consulting firm Watson-Wyatt to assist in the design of a new Human Resources System. Changes to the Compensation, Benefits and Retirement programs of the Human Resources System must be presented to the Board of Visitors for its review and approval.

DISCUSSION: The Human Resources System is being designed to align our policies and practices more closely with others in the health care industry. Health care is a business and our customers have choices as to where they go for services. Because more than half of our costs of operations are for the salaries and benefits of employees, the Medical Center must ensure that compensation and benefits programs are designed to keep our costs competitive.

The Compensation Program is designed to be competitive with programs used by other health care organizations. It is designed with flexibility so that we can accommodate several different salary plans within a single compensation program. It incorporates compensation practices that will allow us to recruit and retain a competent workforce.

The Codified Autonomy legislation required the Medical Center to continue to make available the Virginia Retirement System (VRS) and the VRS group life, accidental death, dismemberment and disability insurance programs. The legislation also allowed the Medical Center to design its own optional retirement programs and to offer other benefits programs. The Medical Center has expanded the Flexible Benefits,

Optional Retirement and Paid Time Off Leave programs, previously available only to Health Care Professionals, to all qualified employees.

The Medical Center will continue to work with the President on the development and implementation of the Human Resources System for which the Board of Visitors delegated authority.

ACTION REQUIRED: Approval by the Health Affairs Committee and the Board of Visitors.


MEDICAL CENTER COMPENSATION AND BENEFITS PROGRAM

The President will propose the adoption of the following resolution:

WHEREAS, the Codified Autonomy legislation allowed the Medical Center to develop a Compensation and Benefits program aligned with the health care industry; and

WHEREAS, the Compensation and Benefits Program will have a phased implementation between July and December of 1998, to allow for orientation and education of management and staff; and

WHEREAS, the Board of Visitors reserves the right to amend these plans and to govern and manage the affairs of the University of Virginia Medical Center at all times;

RESOLVED that the Medical Center Compensation and Benefits Program Policy Statement is approved, subject to the foregoing


III.A. Medical Center Financial Report - March 31, 1998

BACKGROUND: The University of Virginia Medical Center prepares a quarterly operating and financial report for management and Board review. These reports are reviewed with the Executive Vice President and Chief Financial Officer before they are sent to the Health Affairs and Finance Committees of the Board of Visitors.

DISCUSSION: At end of third quarter, the Medical Center continues to experience strong levels of inpatient occupancy, outpatient activity, and very high patient acuity. As expected and projected in the budget amendment submitted to the Health Affairs Committee January 23rd, 1998, these factors have continued to result in higher revenues, expenses, and staffing.

As reported last quarter, new accounting procedures and systems continue to allow the Medical Center to report actual revenues and expenses in a more timely and effective way. Through March, total operating revenues have exceeded the budget as amended by $1.9 million despite substantial increases in contractual allowances required by third party payors.

Through March, total operating expenses, due to growth in volumes and acuity, have exceeded the budget as amended by $5.2 million, driven primarily by growth in the cost of high-tech drugs and medical supplies. Programs aimed at more aggressive medical management of high cost drugs and supplies are underway.

Projections for the remainder of the fiscal year assume continued strong volumes of activity, continued growth in managed care, and a reasonable operating margin. The Medical Center is initiating a program of cost reduction and revenue enhancement strategies.

REQUIRED ACTION: None.


III.B. Vice President's Remarks

ACTION REQUIRED: None.

The Vice President and Provost for Health Sciences will utilize this portion of the Health Affairs Committee Meeting to inform the Board of Visitors of recent events of the Health Sciences Center which do not require formal action, but of which they should be made aware.

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