-4-



Medical Center, Inc. (hereinafter referred to as the Hospital)

the management of the Hospital. The Board of Trustees of the

University hereby accepts this Memorandum of Agreement to

provide the authority to manage the Hospital. It is recognized

by the Board of Trustees of the University and the Board of

Directors of the Hospital that this agreement results from the

desire to maintain, and improve the educational programs of the

Albert B. Chandler Medical Center and the quality of health

care services provided for the benefit of the population of the

state and region.



    The Board of Directors of the Hospital shall provide

management oversight for the affairs of the Hospital and be

responsible  for  the  development   of  policies,   rules,  and

regulations for the governance of the Hospital as contained

herein. The Chancellor of the University of Kentucky Medical

Center shall represent the University interests to the Board of

Directors, and the Director of University Hospital shall report

to the Chancellor. Such rules and regulations shall include but

not be limited to:



    1.   Financial Management



         Effective July 1, 1987, the assets of University

         Hospital  will   be   managed  through   the   auxiliary

         enterprise fund of the University of Kentucky. From

         those auxiliary funds the Hospital shall continue to

         reimburse the University for various services provided