A proposal that would make the University of Tennessee Medical Center at

Knoxville more competitive with other health care institutions while continuing

its mission of providing patient health care, medical education and research,

will go before the University of Tennessee Board of Trustees meeting on

June 17-18.

In a letter to the trustees, UT President Joe Johnson said the proposal

would create an independent, non-profit corporation to manage the medical

center on a level playing field with similar health care institutions. The

proposal would also protect existing UT benefits programs for approximately

3,500 employees currently at UTMCK.

Johnson said changes in the health care industry require this new approach,

as recommended in an 18-month study by a committee of UT physicians, administrators,

staff and community leaders from the Knoxville area. The study examined

various options for UTMCK with the exception of outright sale, which was

prohibited by state law in 1997.

"The study did convince us that the UT Medical Center must change

if it hopes to keep pace and prosper in the next century," Johnson

said. "Our group concluded that a failure to change would put at risk

the medical center's mission as we have known it for more than 40 years."

The trend toward managed care and the growth of payment reform at the

national level have affected academic medical centers throughout the country

by altering reimbursement and methods of providing clinical services, Johnson

said. Teaching future health care professionals and clinical and basic research

are also being affected.

"Moving to an independent corporation would greatly reduce financial

risk to the university," Johnson said. "It would also provide

access to capital for programs and facilities, enable new partnerships with

other providers, and provide for more innovative and flexible purchasing

and business procedures, while allowing the University of Tennessee to retain

ownership of the medical center's assets."

The new corporation would have a board of directors separate and independent

from the UT Board of Trustees. It would contract with the university for

employee services in order to maintain "existing compensation and benefit

levels for current employees," Johnson said.

Medical education, research and management, and oversight of UTMCK would

be handled by a lease agreement between the new corporation, UT and the

State of Tennessee.

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