xt73r20rsb68 https://exploreuk.uky.edu/dips/xt73r20rsb68/data/mets.xml Lexington, Kentucky University of Kentucky 2012 minutes  English University of Kentucky Contact the Special Collections Research Center for information regarding rights and use of this collection. Minutes of the University of Kentucky Board of Trustees Minutes of the University of Kentucky Board of Trustees, 2012-12-11 text Minutes of the University of Kentucky Board of Trustees, 2012-12-11 2012 2014 true xt73r20rsb68 section xt73r20rsb68 Minutes of the Meeting of the Board of Trustees
University of Kentucky
Tuesday, December 11, 2012
The Board of Trustees of the University of Kentucky met at 1:00 p.m. (Lexington time)
on Tuesday, December 11, 2012 in the Board Room on the 18th Floor of Patterson Office Tower.
A.

Meeting Opened

Dr. E. Britt Brockman, chair of the Board of Trustees, called the meeting to order at 1:05
p.m. Chair Brockman asked Trustee Sheila Brothers, Secretary of the Board, to call the roll.
B.

Roll Call

The following members of the Board of Trustees answered the call of the roll: C.B.
Akins, Sr., Stephen Bilas, William C. Britton, E. Britt Brockman, Sheila Brothers, Mark Bryant,
Jo Hern Curris, Oliver Keith Gannon, Carol Martin “Bill” Gatton, Kelly Sullivan Holland, Billy
Joe Miles, Terry Mobley, Charles Sachatello, C. Frank Shoop, James W. Stuckert, Irina Voro,
John Wilson, and Barbara Young. Absent from the meeting was Pamela T. May. Secretary
Brothers announced that a quorum was present.
The University administration was represented by President Eli Capilouto, Interim
Provost Tim Tracy, Vice President for Health Affairs Michael Karpf, and General Counsel
William Thro.
The University faculty was represented by Chair of the University Senate Council Lee
Blonder, and the University staff was represented by Chair of the Staff Senate Mike Adams.
Guests and members of the news media were also in attendance.
C.

Consent Items

Chair Brockman called attention to the nine consent items on the agenda. The items
included the minutes for the Board of Trustees Retreat on October 13-14, 2012, the regular
meeting of the Board on October 14, 2012, PR 2 which deals with personnel actions, and FCR 1,
2, 3, 4, 5 and 6 which included pledges and gifts.
Chair Brockman noted that FCR 1, Ball Realty LLC Gift and Pledge, was a $500,000 gift
and a $1.5 million pledge from Don and Mira Ball. He thanked the Balls not only for their
generous gifts to the University, but their tireless efforts over the years to advance the University
of Kentucky.
Chair Brockman also acknowledged FCR 3, the Crutcher Family Foundation Pledge.
This pledge creates and endows the Crutcher Family Scholarship in the Office of Academic
Scholarships. Chair Brockman thanked and introduced family members Dottie Crutcher Cordray
and Dan Crutcher, who presented a check to the Board and President Capilouto.

* Trustee Stuckert moved approval of the consent items. Trustee Curris seconded the
motion and it carried without dissent. (See consent items listed below on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
Minutes, Board of Trustees Retreat, October 13-14, 2012
Minutes, October 14, 2012
PR 2 Personnel Actions
FCR 1 Ball Realty LLC Gift and Pledge
FCR 2 Request to Rename the Commonwealth Professorship in Physician Leadership to
the Richard W. Schwartz Commonwealth Professorship in Physician Leadership
FCR 3 Crutcher Family Foundation Pledge
FCR 4 Gift from the National Christian Foundation Kentucky to Replace Unfulfilled
Pledges to the Research Challenge Trust Fund
FCR 5 Transfer of Multiple Gifts and State Endowment Match Funds within the Center
for Research on Violence Against Women
FCR 6 Gifts to the Dr. Robert D. Marciani Endowment Fund to Replace Unfulfilled
Pledges to the Research Challenge Trust Fund
D.

Chairman’s Report

Chair Brockman began by reporting that there had been no requests since the last meeting
to speak or appear before the Board.
Chair Brockman reported that the Executive Committee met this morning to review the
proposed changes to the Governing Regulations regarding the Board of Trustees committee
structure. The Committee approved the following proposed changes:
•
•
•
•
•

Consolidate Academic Affairs and Student Affairs;
Consolidate University Relations and Human Resources;
Change the name of the Audit Subcommittee to Audit and Compliance;
Committee reports shall be posted on line within 72 hours after the conclusion of
Committee meetings; and
Athletics and Health Care shall provide a brief update at each Board meeting if the
committee has met.

Chair Brockman stated that the first reading of the revision to the Governing Regulation
would be at the January 29, 2013 meeting.
E.

President’s Report (PR1)

President Capilouto began by introducing Eric Monday, the new Executive Vice
President for Finance and Administration. Mr. Monday comes to UK from Louisiana State
University, where he served as Vice Chancellor of Finance and Administrative Services and
Chief Financial Officer. He brings more than 15 years of experience in higher education,
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* including oversight of campus safety, student life, and other critical duties related to budget and
financial operations. Mr. Monday will begin his duties in late December, 2012.
President Capilouto introduced the three-person team from the Gatton College of
Business and Economics that won the team title at the Annual Wall Street Journal National Biz
Quiz. They were: Bert Smith, a senior from Louisville, with a double major in Finance and
Economics; Ryan McFerran, a senior from Hebron, KY, with a double major in Finance and
Economics; Scott Deschamp, a senior from Louisville with a double major in Economics and
Chemical Engineering; and first alternate and student assistant coach Sean Bell, a senior from
Louisville, with a double major in Economics and Chinese language. The Gatton team was
coached by Dr. Gordon Holbein, a senior lecturer in Strategy and Leadership.
On behalf of the team, Mr. Smith thanked President Capilouto and the Board of Trustees
for the support of the College and their team.
There was a round of applause.
F.

Proposed Revision to Governing Regulation: University Athletics Committee

(PR 3)
President Capilouto said that PR 3 was the second and final reading of proposed revision
to the Governing Regulation (GR) II relating to the University Athletics Committee. The
revision increases the threshold amount the Committee must review for capital projects in
Athletics from $400,000 to $600,000. On a motion made by Trustee Akins, seconded by Trustee
Mobley, PR 3 passed without dissent.
(See PR 3 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
G.

Proposed Revision to Governing Regulation: University Faculty Appointments

(PR 4)
President Capilouto stated that PR 4 was the second and final reading of the proposed
revision to GR VIII.B, relating to faculty appointments and the appointments based on salary that
are submitted to the Board of Trustees for final action.
Chair Brockman asked for a motion and Trustee Farish moved approval of PR 4. Trustee
Gannon seconded the motion and it passed without dissent. (See PR 4 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
H.
Proposed Revision to Governing Regulation: Eligibility to Vote for Staff
Representative to the Board of Trustees (PR 5)
President Capilouto stated that PR 5 was the first reading of a revision of GR II related to
elections for the Staff Representative to the Board of Trustees. The change would allow regular
staff with .75 or greater full-time equivalency the ability to vote in staff trustee elections.

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* Chair Brockman asked for a motion and Trustee Holland moved approval of PR 5.
Trustee Stuckert seconded the motion and it passed without dissent. (See PR 5 on the Board of
Trustees website, www.uky.edu/Trustees, under agenda.)
I.

Naming of University Building (PR 6)

President Capilouto stated that PR 6 is the recommendation that the official name of the
building at 708 South Limestone be the “College of Medicine Learning Center.”
Chair Brockman asked for a motion and Trustee Bryant moved approval of PR 6.
Trustee Akins seconded the motion and it passed without dissent. (See PR 6 on the Board of
Trustees website, www.uky.edu/Trustees, under agenda.)
J.
Appointment to the Board of Directors University of Kentucky Gluck Equine
Research Foundation, Inc. (PR 7)
President Capilouto stated that PR 7 is the recommendation for the approval of the
appointment of Mark Bellissimo to the Board of Directors of the University of Kentucky Gluck
Equine Research Foundation for a four-year term ending December 31, 2016.
Chair Brockman asked for a motion and Trustee Farish moved approval of PR 7. Trustee
Shoop seconded the motion and it passed without dissent. (See PR 7 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
K.

Candidates from Degrees: December 2012 (AACR 1)

Trustee Gannon stated that the Academic Affairs Committee met this morning and there
were five items of business to bring to the Board.
AACR 1 is related to Candidates for Degrees for December 2012 and the list has been
approved by the elected faculty of the University Senate. On behalf of the Academic Affairs
Committee, Trustee Gannon asked for approval for AACR 1 and it passed without dissent. (See
AACR 1 on the Board of Trustees website, www.uky.edu/Trustees, under agenda.)
L.

Academic Degree Recommendation: College of Arts and Sciences (AACR 2)

Trustee Gannon stated that AACR 2 is a recommendation that the Board of Trustees
approve the establishment of a bachelor of arts with a major in Environmental and Sustainability
Studies degree in the College of Arts and Sciences, effective spring 2013.
The proposed Environmental and Sustainability Studies (ENS) degree will educate
students in a broad range of fundamental environmental studies subjects with concepts of
sustainability integrated throughout the curriculum. Students will obtain the fundamental
knowledge required to understand the relationships that exist between the global economy,
societal problems and needs, and the natural world.
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* This program has the approval of the appropriate councils and the University Senate and
has completed the forty-five day review by the Council on Postsecondary Education. The
Interim Provost of the University supports this recommendation.
On behalf of the Academic Affairs Committee, Trustee Gannon asked for approval for
AACR 2 and it passed without dissent. (See AACR 2 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
M.

Academic Degree Recommendation: College of Fine Arts (AACR 3)

Trustee Gannon stated that AACR 3 is a recommendation that the Board of Trustees
approve the establishment of a master of arts with a major in Arts Administration degree within
the College of Fine Arts, effective spring 2013.
The completely online degree program will target people who have strong backgrounds
in at least one arts discipline. Students entering the program will have either an undergraduate
degree in arts administration or an arts-related field, or professional experience working within
an arts organization.
This program has the approval of the appropriate councils and the University Senate and
has completed the forty-five day review by the Council on Postsecondary Education. The
Interim Provost of the University supports this recommendation.
On behalf of the Academic Affairs Committee, Trustee Gannon asked for approval for
AACR 3 and it passed without dissent. (See AACR 3 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
N.

Change in the Name of the College of Agriculture (AACR 4)

Trustee Gannon stated that AACR 4 is a recommendation that the Board of Trustees
approve the change in the name of the College of Agriculture to the College of Agriculture,
Food, and Environment.
While much of the college’s focus remains in the more traditional agriculture disciplines
such as Animal and Food Sciences, Plant and Soil Sciences, and Horticulture, and these
disciplines continue to be crucial to the state, the University of Kentucky College of Agriculture
needs to reflect a connection to all citizens of the Commonwealth and beyond, whether they are
farm families, prospective students from inner city schools, or internationally renowned
biochemists.
The proposed name change was approved by the college faculty; reviewed and
recommended by the Senate Committee on Academic Organization and Structure and the Senate
Council; and endorsed by the University Senate. The Interim Provost of the University supports
this recommendation.
-5-

* On behalf of the Academic Affairs Committee, Trustee Gannon asked for approval for
AACR 4 and it passed without dissent. (See AACR 4 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
O.

Restructuring of an Educational Unit (AACR 5)

Trustee Gannon stated that AACR 5 is a recommendation that the Board of Trustees
approve the restructuring of the College of Agriculture’s Department of Merchandising, Apparel
and Textiles to the Department of Retailing and Tourism Management, effective July 1, 2013.
The restructured Department of Retailing and Tourism Management will bring together
applied social science faculty within the College of Agriculture and provide focus for meeting
the changing needs of society to reflect the move from a service economy to an experiential
economy.
The merger process began with a review of the two UK programs by outside consultants.
The consultants expressed the belief that the Hospitality Management and Tourism
undergraduate program lacked an identity because it was too embedded in the Department of
Dietetics and Human Nutrition to be sought after by potential students. After much discussion,
faculty members recognized many commonalities between the Merchandising, Apparel and
Textiles and the Hospitality Management Tourism programs and significant potential for the two
programs in the merged department.
The proposal has been approved by the college faculty and the Agriculture Faculty
Council; reviewed and recommended by the Senate Committee on Academic Organization and
Structure and the Senate Council; and endorsed by the University Senate. The Interim Provost of
the University supports this recommendation.
On behalf of the Academic Affairs Committee, Trustee Gannon asked for approval for
AACR 5 and it passed without dissent. (See AACR 5 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
P.

University Athletics Committee Report

Trustee Akins reported that the Athletics Committee met this morning. The Committee
reviewed and endorsed the second reading of the revision to the Governing Regulation regarding
the threshold amount for review of capital projects.
The Committee then considered the financial statements of the Department of
Intercollegiate Athletics. Angie Martin, Treasurer, reviewed the quarterly financial statements of
the department, including the balance sheet, the statement on revenue expenses, and the change
in Net Assets. Trustee Akins reported that the Committee accepted the quarterly financial
statements as presented.
The Committee heard from Marc Hill, Executive Associate Athletics Director for Internal
Operations, who presented an update on the happenings in Athletics this fall.
-6-

* There has been a tremendous response from the media and public regarding the hiring of
former Florida State University defensive coordinator Mark Stoops as the new head football
coach. Coach Stoops is hiring a strong staff of assistant coaches including offensive coordinator
Neal Brown from Texas Tech and defensive coordinator D.J. Eliot, who worked closely with
Coach Stoops at Florida State. Offensive lineman Larry Warford, linebacker Avery Williamson
and linebacker Bud Dupree received All-SEC honors from various organizations. Punter Landon
Foster received Freshman All-America recognition.
The volleyball team finished the season 22-11, reaching the Sweet 16 of the NCAA
Tournament for a second straight year. This tournament appearance was the eighth-consecutive
under Coach Craig Skinner, and the 14th in program history.
The UK women’s soccer team reached the second round of the 2012 NCAA Women's
Soccer Championship, ending the season with a 14-6-1 mark under Coach Jon Lipsitz. Men's
soccer reached the NCAA Tournament for the first time in nine seasons under first-year head
coach Johan Cedergren, finishing the season with a 10-9-2 record.
Both men’s and women’s cross country teams made significant progress under first-year
head coach Edrick Floreal and assistant coaches Jason Dunn and Hakon DeVries. The UK
women’s cross country team returned to national prominence in 2012 and the men’s team
finished sixth at the SEC Championships and 11th at Regionals. Luis Orta capped a spectacular
career with his first ever appearance in the NCAA Championships and All-Southeast Region and
All-SEC selection.
The Athletics Department will update the Committee on the fall 2013 academic success
of its student athletes at the Committee’s next meeting.
Q.

Finance Committee Report

Trustee Stuckert reminded the Board that consent items FCR 1, FCR 2, FCR 3, FCR 4,
FCR 5, and FCR 6 were approved earlier in the meeting.
R.
Approval of the Fiscal Year 2011-12 Endowment Match Program Annual Report
(FCR 7)
Trustee Stuckert stated that FCR 7 is the approval of the fiscal year 2011-13 Endowment
Match Program Annual Report. On behalf of the Finance Committee, Trustee Stuckert moved
adoption of FCR 7 and it passed without dissent (See FCR 7 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
S.
Acceptance of Interim Financial Report for the University of Kentucky for the
Three Months ended September 30, 2012 (FCR 8)
Trustee Stuckert stated that FCR 8 is the acceptance of the Interim Financial Report for
the University of Kentucky for the three months ended September 30, 2012. He noted that the
quarterly summation was discussed at the Committee meeting. On behalf of the Finance
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* Committee, Trustee Stuckert moved adoption of FCR 8 and it passed without dissent (See FCR 8
on the Board of Trustees website, www.uky.edu/Trustees, under agenda.)
T.

2012-13 Budget Revisions (FCR 9)

Trustee Stuckert stated that FCR 9 was the 2012-13 budget revisions. The budget
revision will increase the total budget by $20 million, which recognized the June 30, 2012 fund
balances. On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 9 and
it passed without dissent. (See FCR 9 on the Board of Trustees website, www.uky.edu/Trustees,
under agenda.)
U.

Renovate Robotics Building (FCR 10)

Trustee Stuckert stated that FCR 10 was the renovation of approximately 6200 square
feet of laboratory space to provide more contemporary research space for biomedical
engineering. The current total available funding for the estimated $3.8 million project is $1.8
million; therefore the University intends to prioritize the improvements and install all the utilities
in the first phase thereby enabling future connections as additional funds become available.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 10 and it
passed without dissent. (See FCR 10 on the Board of Trustees website, www.uky.edu/Trustees
under agenda.)
V.
Repair/Upgrade/Expand Central Plants (Replace Cooling Tower at Medical
Center Cooling Plants) (FCR 11)
Trustee Stuckert stated that FCR 11 is to repair/upgrade/expand the central plants,
replacing a cooling tower at the Medical Center cooling plant. The current cooling tower is in
excess of 10 years old and does not meet present day cooling capacity requirements due to
increased loads and other inefficiencies. The project has an estimated scope of $870,000 and
will be funded with general funds. On behalf of the Finance Committee, Trustee Stuckert moved
adoption of FCR 10. Chair Brockman opened the floor for discussion.
Trustee Voro expressed her concern that the project was to be funded with general funds
and not monies provided by the Medical Center. Bob Wiseman, Vice President for Facilities,
explained that the cooling plants serve both campus and the Medical Center. The Medical
Center has paid their amount as part of the hospital construction. This is the amount allocated to
campus. Trustee Voro indicated that she could not support this due to continued budget cuts to
academic programs.
Seeing no further discussion, Chair Brockman called for the vote. The motion passed
with 18 affirmative votes and one no vote.
(See FCR 11 on the Board of Trustees
website, www.uky.edu/Trustees under agenda.)

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* W.
(FCR 12)

Repair/Upgrade/Improve Mechanical Infrastructure (Steam Line – Farm Road)

Trustee Stuckert stated that FCR 12 is the repair, upgrade and improvement for a
mechanical infrastructure, which is a steam line on Farm Road. This is the replacement of the
third and final section of this 25-year- old steam line pipe. The scope of the legislative authorized
project is $835,000, and will be funded with General Funds.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 12 and it
passed without dissent. (See FCR 12 on the Board of Trustees website, www.uky.edu/Trustees
under agenda.)
X.
Approval of Deed of Conveyance to the Commonwealth of Kentucky,
Transportation Cabinet, Department of Highways for Construction of Bridge (County Road
1387) in Breathitt County (FCR 13)
Trustee Stuckert stated that FCR 13 involves the approval of a deed of conveyance to the
Commonwealth of Kentucky Transportation Cabinet Department of Highways. The 1.249 acres
at a sales price of $6,050 is for construction of a bridge on County Road 1387. The property is
surplus to the needs the University and the proposed conveyance is in the best interest of the
Commonwealth.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 13 and it
passed without dissent. (See FCR 13 on the Board of Trustees website, www.uky.edu/Trustees
under agenda.)
Y.

Capital Construction Report (FCR 14)

Trustee Stuckert stated that FCR 14 is a capital construction report. Bob Wiseman gave a
very detailed report at the Finance Committee meeting. On behalf of the Finance Committee,
Trustee Stuckert moved adoption of FCR 14 and it passed without dissent. (See FCR 14 on the
Board of Trustees website, www.uky.edu/Trustees under agenda.)
Z.

Patent Assignment Report (FCR 15)

Trustee Stuckert stated that FCR 15 involves the patent assignment report. Jim Tracy,
Vice President for Research, gave a detailed report at the Finance Committee meeting. On
behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 15 and it passed
without dissent. (See FCR 15 on the Board of Trustees website, www.uky.edu/Trustees under
agenda.)
AA.

Audit Subcommittee Report

Trustee Britton reported that the Subcommittee had met, but had no action items. Joe
Reed, Senior Director of Internal Audit reviewed with the subcommittee items typically
addressed in an internal audit report.
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* BB.

Investment Committee Report

Trustee Gatton reported that the Investment Committee met yesterday to review
performance results and conduct other business. The Endowment had a net market value of
$908.4 million as of October 31, 2012. For the four months ended October 31, 2012, the
Endowment pool returned 4.4%, outperforming the policy benchmark return by 77 basis points.
The outperformance against the policy benchmark was due to strong performance by the fixed
income, absolute return and real return managers.
The Committee voted to extend the contract for investment consultant, R.V. Kuhns &
Associates, for fiscal year 2013-14. The University hired R.V. Kuhns & Associates, or RVK, in
April 2008 as a result of an RFP process. The contract was structured as a four-year fixed term
and allowed up to four one-year renewals at the option of both parties. RVK consultants attend
each Investment Committee meeting to review performance of the existing investment managers
and advise on asset allocation issues. RVK has assisted the Committee with diversification of the
endowment investments. Since hiring RVK, the University has implemented new absolute and
real return allocations to reduce volatility and protect against anticipated inflation. Additionally
under RVK’s guidance, UK has significantly increased its commitment to private equity and
private real estate strategies which are expected to enhance long-term returns.
The Committee voted to approve the Endowment Investment Policy, which must be
formally reviewed at least annually. The new policy contains several changes to the spending
policy including adoption of a “hybrid” spending formula which factors the current level of
inflation and the market value of the endowment in determining spending each year. The change
to a hybrid method is expected to smooth spending distributions from year to year and preserve
the value of the endowment over the long term. Fiscal year 2013-14 will serve as a transition
year and spending will be based on 4% of the trailing 60-month average market value. The new
hybrid policy will then be fully implemented in fiscal year 2014-15, with 60% of spending based
on the prior year’s spending plus or minus the annual change in inflation; and 40% based on 4%
of the trailing 36-month average market value.
Trustee Gatton continued that other significant changes to the spending policy include a
new requirement to suspend spending and management fee withdrawals on all endowments
underwater more than 20%. Another requirement is that endowments underwater more than
10% but less than 20% undergo a formal review by the Treasurer and the appropriate college
dean to determine the appropriate level of spending in accordance with various factors set forth
under state law. Lastly, there is a new requirement to delay spending distributions on new
endowment gifts for at least one year in order to build a spending reserve.
CC.

Student Affairs Committee

Trustee Wilson reported that Student Affairs had met this morning. The committee had
no action items, but had two reports. The first was from the Students of Concern Committee, led
by Case Manager Teresa Smith and Associate Dean of Students for Student Conduct Dana
Walton-Macaulay. Students of Concern is a team of multidisciplinary professionals that provide
a central point of contact when there might be a concern regarding an individual(s) on campus.
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* Trustee Wilson stated this is an outstanding safety prevention program and an important
element in the overall campus safety plan. The committee had three recommendations: review
procedures to look for ways to strengthen protection for students or employees who file a report;
additional training for academic and resident advisors about the program; and make the
University of Maryland, which has had outstanding success, a benchmark for the program.
Trustee Bilas reported on the renegotiation of the Wildcats in Washington program and
the progress on the University Creed program.
DD.

University Health Care Committee

Trustee Young reported that Drs. Gerald Klim, Kristy Deep and Dr. Horacio Zaglul
presented a comprehensive report on UK HealthCare Palliative Care Service. Beginning in 2008
UK has worked with Hospice of the Bluegrass to set up a palliative care program at UK that
provides excellence in pain and symptom management, facilitates patient and family centered
communication and educates all healthcare providers in primary palliative care. This program
has been very successful and well received by patients, family and physicians.
Murray Clark presented the October 2012 Financial Review including a new schedule of
Statistical Highlights which includes 16 major statistics that drive the financial performance of
the hospital’s inpatient and outpatient services. These indicators define volume, efficiency and
revenue generation. In summary, the system is seeing a high level of activity of patients from all
services, generating higher levels of revenue based on this acuity and payor mix, and delivering
care in a very cost-effective manner.
The income statement indicates a strong revenue flow due to volume, payor mix, acuity
and length of stay for both inpatients and outpatients. Ambulatory clinics are significantly ahead
of last year in volume and this year’s budget. Personnel expenses are below budget with some
anticipated recruiting to handle the increased volume. Variable and fixed expenses are in line
with the level of activity. All of this has led to a much better than anticipated income from
operations for the year, amounting to $29.558 million, or a 9.2% operating margin. Nonoperating revenues remain strong. All of these factors have produced an increase in net assets
for the period, significantly above budget and the prior year.
On the balance sheet, it should be noted that Chandler Hospital has moved from an
interim payment system for Medicare with settlement occurring when the cost report is settled to
payment on an individual claims basis. This change in practice moves the Medicare receivables
from the estimated third party balance sheet account to the accounts receivable account, thereby
adding $18.8 million to accounts receivable. This change will enhance cash flow from
Medicare. The hospital continues to have problems collecting from the new Medicaid Managed
Care Organizations.
In Non-Current Assets, there has been a positive addition to investments of $9.8 million
this year. In Liabilities, accrued expenses include the UK working capital loan of $67.4 million
as of the end of October. The amount was $65.2 million at the end of FY 12. Preliminary key
drivers for the month of November indicate continued strong performance from UK HealthCare.
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* Trustee Young continued that Dr. Bernard Boulanger presented the Quarterly Report on
Quality. Overall, Quality and Safety initiatives continue to improve. Dr. Boulanger reported on
six enterprise goals including mortality, effectiveness, safety, efficiency, patient satisfaction and
employee engagement. With a few exceptions, all goals were met by the enterprise and efforts
are being made to continue to improve performance. Ambulatory Practice scores were on target.
However, in October when volume was exceptionally high some service issues caused patient
satisfaction to fall. These issues are being addressed. Pediatric Hospital Consumer Assessment
of Healthcare Providers and Systems (HCAHPS - a national assessment of patient satisfaction)
and five new adult HCAHPS will start in January 2013.
Dr. Steven Strup presented for approval the current list of privileges and credentials. The
committee made a motion and all privileges and credentials were approved.
The committee voted to approve amendments to the medical staff bylaws governing the
medical staff at the University of Kentucky Hospital and UK HealthCare Good Samaritan
Hospital as the bylaws of the UK HealthCare Medical Staff. These amendments were approved
by the Organized Medical Staff on October 31, 2012.
Trustee Sachatello commented on the Palliative Care presentation and remarked it was
the single best presentation he had ever heard. He hoped the presentation would be placed on the
website.
EE.

University Relations Report

Trustee Curris reported that the committee met this morning and there were no action
items. The committee heard a presentation from Dr. Michael Karpf, Executive Vice President of
Health Affairs regarding the critical and creative marketing and public relation strategies for UK
Healthcare.
The presentation began with an overview of the University of Kentucky Medical Center
“brand”, its importance, and the evaluation strategy of creating a brand. Dr. Karpf reported that a
study conducted in 2004 confirmed an image problem with the UK Hospital. It was ranked as an
area hospital that people would not use. Reasons given in the study were poor service, a bad
experience, and poor medical care. In fact, at that time, 25% of UK employees would not
recommend UK Hospital. Therefore, the initial drivers of change in UK HealthCare were a
mandate from the Kentucky General Assembly for UK to become a Top 20 public research
institution and a steady decline in clinical activity. The brand had eroded and needed to be
enhanced.
In his 2004 strategic plan, Dr. Karpf called for advances in subspecialty care. This
included a Level 1 trauma center, the Kentucky Children's Hospital, organ transplants, and the
Markey Cancer Center. He called for expanded regional care. He wanted to leverage
community health care providers by augmenting special services and allowing