SKIP TO Hospital Thriving Now New Agreement with Saint Luke Ongoing Negotiations Related Issues Stem Cell Research

Understanding the KU Medical Center debate

During the 2007 legislative session, lawmakers made several unsuccessful attempts to restrict the power of the University of Kansas and its KU Medical Center to enter into affiliation agreements with other health care providers.  The legislative proposals were sparked by negotiations that the Medical Center was holding with Missouri-based Saint Luke’s Hospital. 

KU Hospital has been the KU Medical Center’s primary partner for over 100 years, although the Medical Center maintains over 1,000 lesser affiliation agreements with other health care entities.  Last spring the Hospital voiced concern about its possible financial damage if the Medical Center would strike a new deal with Saint Luke, a competitor of KU Hospital.  Legislators were troubled by the idea of Kansas tax revenue potentially flowing to the out-of-state hospital and by the chance that the Medical Center’s mission to produce physicians for Kansas might be compromised.

KU and its Medical Center maintain that the “number one” reason for negotiating with Saint Luke is to create an attractive overall cancer research and treatment program that garners the Medical Center an official designation as a “Comprehensive Cancer Center” from the National Institute of Health – a status that only university-affiliated programs can attain.  The KU Hospital has since 1998 spent $17 million, plus millions more in equipment and facilities, to develop its own outpatient cancer clinic.

Lawmakers did agree to launch an investigation by the Legislative Division of Post Audit into the Hospital and the Medical Center’s relationship.   Published in October 2007, you can access the full Post Audit reports of their relevant operational issues and financial issues online.    The following background is largely taken from that source.

Hospital thriving after its spin-off from KU Medical Center

Before 1998, the University of Kansas Medical Center included both a hospital and a teaching/research facility.   Both entities were part of the University of Kansas.  However, KU Hospital was in financial trouble, including declining revenues, a drop in the number of patients, problems with the heart transplant program, and lack of timely access to capital.   

The Board of Regents hired consultants to review the Hospital’s situation.  The consultants concluded that being regulated as a government agency had reduced the Hospital’s ability to compete with non-regulated providers.

In 1998, the Legislature separated the KU Medical Center functions and created an independent Hospital Authority to govern the hospital.  Although the Hospital retained the University of Kansas name, it is no longer part of the University or the Medical Center.  The 1998 legislation clearly specifies that the Hospital is not a state agency, its employees are not employees of the state, and it is not subject to state purchasing laws.    Furthermore, the Hospital receives no state appropriations. 

The Medical Center remains under the jurisdiction of the University of Kansas, with the head of the Medical Center reporting directly to the KU Chancellor.

The Hospital Authority is governed by a 19-member board of directors, two of whom are the KU Chancellor and the head of the Medical Center.  Thirteen of the board members are appointed by the Governor, subject to Senate confirmation.

Since it was spun off from the Medical Center, the Hospital’s situation has improved significantly.  For example:  the Hospital’s total revenues grew from about $190 million in 1998 to about $540 million in 2006; the volume of inpatients grew from about 14,000 to nearly 20,000 over that period; and, the Hospital has reopened its heart surgery program.

Medical Center strikes agreement with Saint Luke

On October 18, 2007, the Board of Regents approved a contract in which Saint Luke agrees to pay $1 million per year to the Medical Center.  In exchange, Saint Luke will be allowed to call itself “a teaching and research hospital of the University of Kansas Medical Center”, will host at least 10 additional Medical Center student residents, will spend at least $15 million per year on medical education and clinical research activities, and will develop with the Medical Center a coordinated plan of research.

A separate affiliation agreement with Saint Luke related to cancer care and cancer research will be negotiated and finalized at a later date.

Ongoing Medical Center negotiations with KU Hospital

Concerns about the courtship by Saint Luke were brought to the Legislature last session by Irene Cumming, the then-president of KU Hospital.  Cumming resigned her post in June and was replaced by Bob Page, a leader whom the Medical Center says has “ushered in a new era of constructive engagement.”

Also influencing the Hospital’s negotiations is the makeup of its board of directors.  Seven of the board members have agreed to continue serving despite the expiration of their terms.  One new appointment was named on October 8, 2007, but it was the board’s first new appointment since January 2006.  Governor Sebelius and Senate leaders argued about the proper process for naming replacements, House Speaker Melvin Neufeld speculated that the Governor was trying to “stack” the Hospital board’s membership, and Attorney General Paul Morrison issued an opinion letter attempting to clarify their appointing responsibilities.

The Medical Center’s October 18 agreement with Saint Luke may have paved the way for a new agreement between the Medical Center and the KU Hospital.  Medical Center vice chancellor Barbara Atkinson made overly optimistic statements suggesting that November 15 could be the day a new master affiliation contract between the Medical Center and the Hospital is settled.  Although that prediction proved wrong, Hospital president Bob Page expressed confidence that the deal will happen despite some “tough sledding” yet to go, and a Medical Center spokesperson said negotiations would not likely extend into January 2008.

The January timetable, prior to the start of the 2008 Kansas legislative session, is a contract finalization target that has been mentioned multiple times by persons representing KU, the Medical Center, and Saint Luke (see, e.g., editorial reference).

Related Issues

A confusing array of side issues is not surprising when nine-figure investments are at stake, when life saving and cutting edge medicine is the core topic, when the prestige of a major state university stands to grow, and when the clout of prominent political leaders is employed to jockey the competing interests in this debate.  Significant issues in this mix include:

• Those evaluated in the recent Legislative Post Audit reports:
  • Does the Medical Center have sufficient cash flow to cover its major financial obligations?
  • How has the money the Legislature appropriated for the Medical Center’s cancer program been spent?
  • Was the Hospital’s separation agreement with its former CEO appropriate?
  • Was the Hospital’s purchase of an electronic medical records system appropriate?
  • How has spending for the Medical Center’s education and research functions changed in recent years?
  • How has the Medical Center’s R&D focus affected funding for its Wichita and Kansas City campuses?
  • Is the relationship between KU Hospital and KU Medical Center in keeping with state law and how does it compare with similar medical school arrangements in other states?
  • Does the KU Hospital have a reasonable method to value the care it gives to indigent patients?
• Will Kansas get its money’s worth from any financial gain that flows to Saint Luke?
• Will KU Hospital’s financial strength suffer while its competitor Saint Luke benefits?
• What will new agreements between KU/Saint Luke/KU Hospital mean to the future of teaching and research at the KU Medical Center campus in Wichita?
• Will KU’s ability to provide new doctors willing to practice in rural Kansas areas improve or erode?
• Will the new affiliation with Saint Luke significantly improve KU’s chance to obtain National Cancer Institute status?
• What other affiliation agreements by KU will be affected by, or be created because of, KU’s affiliation with Saint Luke?
• What other affiliation agreements will KU create in order to gain National Cancer Institute status?
• What type of cancer research will KU conduct?

Stem Cell Research 

The last few issues mentioned in this list could involve the controversial practice of human cloning and destroying human embryos to extract embryonic stem cells in the attempt to find cancer treatments.  The Kansas Legislature has made a few attempts to ban research destructive to human life on the basis of ethical, moral, and practical considerations.  KU currently has at least one affiliation agreement with a research facility, the Missouri-based Stowers Institute, that engages in embryonic stem cell experiments.

In announcing the agreement with Saint Luke and outlining the remaining negotiations to take place, KU Chancellor Robert Hemenway wrote in a transmittal letter to the Board of Regents:

We also know new opportunities are emerging in translational and clinical research.

This research is designed to speed the delivery of new discoveries in the laboratory to

the patient.   KU is well-positioned to leverage the basic science discoveries of the

Stowers Institute for Medical Research and we are creating a leading center for drug

discovery and development.   Collaborations with other institutions will add even

greater momentum to this effort and enhance the possibilities for even greater gains

for patients.  This too is good for Kansans.

Founders, board members, and leading executives of the Stowers Institute, Saint Luke’s Hospital, and Saint Luke’s Health System are also members of the Missouri Coalition of Lifesaving Cures.  The coalition’s website explains: 

The Missouri Coalition for Lifesaving Cures successfully used the initiative petition process to place a constitutional amendment on the statewide ballot to ensure equal treatment of Missouri patients. Voters approved the amendment on Nov. 7, 2006.   Passage of the Stem Cell Amendment made it clear in our state constitution that any stem cell research and cures permitted by federal law will continue to be allowed in Missouri…

Conflict on this matter in Kansas is not inevitable.  The scientific usefulness of embryonic stem cells is dwarfed by the corresponding value of research using noncontroversial adult stem cells.  Furthermore, very recent breakthroughs in research have revealed a way to transform adult stem cells into “pluripotent” stem cells that offer all the same scientific utility as embryonic cells.