xt79s46h1p60 https://exploreuk.uky.edu/dips/xt79s46h1p60/data/mets.xml Lexington, Kentucky University of Kentucky 19780630 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, 1978-06-jun30-ec. text Minutes of the University of Kentucky Board of Trustees, 1978-06-jun30-ec. 1978 2011 true xt79s46h1p60 section xt79s46h1p60 

    Telephone Conference Call Meeting of the Executive Committee,
Board of Trustees, University of Kentucky, Friday, June 30, 1978

    At 10:45 a.m. (EDT) on Friday, June 30, 1978, a telephone con-
ference call was held with members of the Executive Committee of the
Board of Trustees for the purpose of approving the General Fund Operat-
ing Budget for the College of Medicine for 1978-79 and approving "in
principle" a draft copy of a contract between the University of Kentucky
Board of Trustees and the Kentucky Medical Services Foundation, Inc.
The following members answered the roll call: Mr. William B. Sturgill,
Chairman, Mr. Albert G. Clay, Mr. William R. Black, and Mr. George W.
Griffin. Professor Sears, ex officio secretary, participated in the
call as did Vice Presidents Clapp and Bosomworth, and Mr. John Darsie,
Legal Counsel.

     In the absence of President Singletary, Vice President Clapp ex-
plained that the telephone conference call was necessary since it was
proposed that operation of the new "geographic full-time plan" begin at
midnight on June 30. Therefore, approval was needed prior to the final
approval at the July 7, 1978 called meeting of the Executive Committee.
Copies of the two documents had been received by all members of the
Executive Committee, with the exception of Mr. Black, prior to the call.

     Dr. Clapp gave a detailed analysis of the changes in the proposed
budget for the College of Medicine resulting from the establishment of
the outside corporation known as the Kentucky Medical Services Founda-
tion, Inc. which was approved by the Board of Trustees at its meeting
on Tuesday, June 20, 1978. Several questions were raised and answered
by Dr. Clapp. Mr. Clay then moved that, based on the information pro-
vided by Dr. Clapp and his explanation of the changes, the General
Operating Fund Budget for the College of Medicine for 1978-79 be approved
subject to ratification at the July 7, 1978 special meeting of the
Executive Committee. The motion was seconded by Mr. Griffin and passed
without dissent. (See Attachment 1 at the end of the Minutes)

     Dr. Clapp prefaced his remarks about the contract by saying that
while there had been no fundamental disagreement with the approach in
the draft document, there may be certain language changes and techni-
cal changes which will be necessary prior to finalizing the contract
for approval on July 7, 1978. He emphasized that the contract had not
yet been approved by the Kentucky Medical Services Foundation, Inc. and
that it was possible, but not probable, that it might not be approved
as presented.

     Dr. Clapp read the changes which were proposed to be made in the
contract as shown in the attached copy. In answer to a question by
Mr. Clay, Dr. Clapp assured him that the contract is for one year only.
Mr. Sturgill asked if the University would continue to collect accounts
receivable for the University as under the old procedure. Dr. Clapp
replied that any services rendered prior to midnight, June 30, will


create assets for the FUND; any services after midnight by faculty
who have elected Plan "B" will create receivables due and payable to
Kentucky Medical Services Foundation, Inc. The University will, how-
ever, continue to bill and collect for about five months into the new
fiscal year to assure the protection of cash and assets which accrued
prior to July 1. After the five months, the Foundation will provide
for its own collections. The University will have rights to inspection
and audit after December 1 but the management will be the Foundation's
responsibility. Before December 1, arrangements will have to be worked
out to protect the University's interests in the period beginning
December 1.

     In closing his presentation Dr. Clapp said that it was hoped that
the final draft of the contract might be placed in the mail on Monday,
July 3, for action on July 7. In the meantime, he requested that
approval be given "in principle" to the proposed contract with the
changes he had indicated so that the University could operate until
final action is taken on July 7.

     Mr. Griffin moved approval "in principle" of the draft copy of
the contract between the University of Kentucky Board of Trustees and
the Kentucky Medical Services Foundation, Inc. with the changes as
made and with the understanding that the final contract would be pre-
sented on July 7. His motion was seconded by Mr. Black and passed
with all participants voting aye. (See Attachment 2 at the end of the

     It was suggested that the meeting on July 7 be changed from 2:00
o'clock (EDT) to 3:00 o'clock with the luncheon at 1:00 o'clock rather
than 12:00 o'clock. There being no objections, the secretary was asked
to send out notices indicating the change in time.

    There being nothing further to be discussed, the conference call
meeting was declared adjourned at 11:24 a.m.

                                    Respectfully submitted,

                                    Paul G. Sears, Secretary
                                    Board of Trustees

(Attachments 1 and 2 which follow are official parts of the Minutes)


                        ATTACHMENT 1

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                                              ATTACHMENT 2


            THIS A' EE'NZT made and entered into this       day of

                 , 1978, by and between the BOARD OF TRUSTEES OF THE

  UNIVERSITY OF KENTUCKY, a statutory body corporate existing pur-

  surant to Section 164.100 et sea of the Kentucky Revised Statutes

  (hereinafter referred to as the University) and KENTUCKY 1EDICAL

  SERVICES FOUNDATION, INC., a non-stock, non-profit corporation

  formed pursuant to Chapter 273 of the Kentucky Revised Statutes

  (hereinafter referred to as the Foundation).


  Section 1. RECITALS

            A. Foundation is organized for the purposes stated in

  its Articles of Incorporation as a non-stock, non-profit corpora-

  tion and will use and apply the whole or any part of its income

  and principal exclusively for charitable, scientific, or educational

  purposes at or for the benefit of, the University of Kentucky

  !edical Center.

             B. A substantial number of University's faculty in its

  College of -'Iedicine have heretofore executed agreements with

  Foundation, known as "Practice Agreements and Assignments" where-

  by said faculty have assigned to Foundation their professionally

  generated clinical income.

             C. The recruitment and retention of the members of the

  medical faculty of the University will be improved by permitting

  the said members to supplement, by income from the practice of

  medicine, the salaries provided by the University.

             D. The University recognizes that the medical practice

   activities of its faculty members can be conducted in a more

   efficient and economical manner if those faculty members who


produce income are permitted, through the medium of the Founda-
tion, to exercise a larger voice in the expenditure of the funds

so produced.
          E. The University has heretofore established, in addi-

tion to its previously adopted Physicians Service Plan, a
"geographic full-time medical service plan", the said geographic

full-time plan having been adopted on June 20, 1978; said action
is herebv incorporated by reference as if set out in full herein.

          F. The aforementioned action of Universicy's Board of

Trustees authorized the University's President to negotiate and

execute a contract, subject to the approval of said Board, with

an appropriately qualified entity for carrying out necessary

functions and assuming the responsibilities involved in the ad-

ministration of income for professional services under the olan.

          NOW THEREFORE, the parties hereto agree as follows:


          A. "The Plan" means the geographic full-time medical

service Dlan for the University of Kentucky College of Medicine

established by action of the Board of Trustees of said University
dated June 20, 1973.

           B. "Clinical income" means (i) all payments for pro-

 fessi.onal services rendered to or with respect to patients whether

 denominated as diagnosis, treatment, evaluation, or consultation

 and whether said payments be characterized as fees, retainers, or
                whether direct or in kind, (excluding actual travel costs),
 otherwise, and (ii) all payments f'or oversight or administration

 of, or consultation with, facilities, programs, or other opera-

 tions providing care, services or evaluation relating to patients,

 and (iii) witness fees or other payments relating to depositions

 or other evaluations in the capacity of an expert witness. Pro-

 vided, however, that nothing contained herein shall be deemed

 to include in the term "clinical income" any item excluded there-

 .from by paragraph II, B of the plan.



          C.  "Practice agreements" means those documents, de-

nominated Practice Agreements and Assignments heretofore executed

by certain members of University's faculty, the University, The

Fund for Advancement of Education in the University of Kentucky

Hedical Center and the Foundation.


          A. Pursuant to paragraph III, A. of the aforementioned

action of University's Board of Trustees dated June 20, 197S,

University hereby recognizes Foundation as an "appropriately

qualified organizational entity" as described therein for carry-

ing out necessary functions and assuming the responsibilities

involved in the administration of income for professional services

under University's "geographic full-time medical services plan".

          B. The parties recognize that amendments to this agree-

ment may be necessitated in the first year of its operation due

to the complexities of certain of the matters contained herein.

Such amendments may be made from time to time by mutual consent.


          A. Foundation agrees that it will accept, pursuant to

practice agreements the assignment of all clinical income by

participants in the plan and, in accordance with such assignment,

agrees to bill the amount of duly established charges for pro-

fessional services to parties determined to be responsible for

payment of such charges, with the exception of the billing and

collection of the professional component of combined charges for

institutional (hospital and clinical) and professional services.

University hereby agrees to bill and collect said professional

component of combined charges in accordance with University

policies and procedures and to remit monthly to Foundation the

net amount collected which is attributable to the professional

component of said combined charges. The determination of the

net amount collected which is attributable to professional



components of such charges will be in accordance with the exist-
ing basis and method utilized by University for such determination.
       - B. University, in order to assure proper transition,
safeguard University assets, and provide an appropriate period

for the relocation of certain of its current personnel hereby

agrees to perform the aforementioned billing and collection func- '

tion for the period beginning July 1, 1978 and ending November 30,

1978 and to remit collections for professional services rendered

on or after July 1, 1978 by faculty who have executed practice

agreements to Foundation.
          C.  Provision f.or the performance of the billing and

collection function, including billing and collection of charges

for the professional services of faculty who have not executed

practice agreements, including those covered by the current PSP

and DSP will be the subject o.E an addendum hereto which will be

executed by the parties prior to December 1, 1978.

          D. Foundation agrees that it will, through appropriate
contractual arrangements, provide for the collection of its de-

linquent accounts by Health Care Collection Service, Inc. , a

Kentucky non-profit corporation, under the same terms and condi-

tions as that corporation now collects accounts for the University.

Provided, however, that Foundation nay require, as a condition

precedent to said contractural arrangement, that said corporation

amend its Articles of Incorporation and By-Laws to provide that

a person designated by Foundation serve as a member of the Board

of Directors of said corporation.


           A. In accord with paragraph II, D. 2 of the plan, the
parties recognize that Foundation must reimburse University for

actual expenses incurred by it which are attendant to the produc-

tion of clinical income.


. -        - - - - ___ - - - - I  - Z - - - - - - -  - _Z   __ - - - _- - - -
.   - .. - . -    j  __ - __ - - - - - __ - - I - - - -  - - -  - - -


        B %. Foundation, in order to provide for reimbursement of

University expenses hereunder, agrees that it will cause to be

deposited, on a current basis, in a segregated account, an amount

equal to sixteen and one-half (16.5%) percent of all monies

collected by it which are attributable to clinical income, until

said segregated account shall contain the sum of Nine Hundred

Twenty-Eight Thousand ($928,000.00) Dollars.

        C.ZX. Foundation agrees to pay to University, from said

 account, as reinmbursement for the provision of professional

 liability insurance, the sum of Two Hundred Twenty-Eight Thousand

 ($22S,000.00) Dollars in seven (7) equal monthly installments,

 the first said installment being due and payable on December 31,

 1978 and monthly thereafter until June 30, 1979.

        b. b. Foundation agrees to pay to University, from said

 account, as reimbursement for the remainder of the expenses

 identified in subsection B. hereinabove, University's actual annual

 costs, not to exceed the sum. of Seven Hundred Thousand ($700,000.00)

 Dollars. Payments hereunder shall be made in seven (7) monthly

 payments, the first six (6) of said payments. due and payable on

 December 31, 1973 and monthly thereafter until May 31, 1979 to be

 in the amount of One Hundred Thousand ($100,000.00) Dollars and

 the last of said payments, due on June 30, 1979 to be in an amount,

 not to exceed One Hundred Thousand ($100,000.00) Dollars, deter-

 mined with reference to actual University expenses hereunder for

 the period beginning on July 1, 1978 and ending June 30, 1979.
                                                to jointly conduct a
         E.. ,.  Foundation and University agree/-hat the. sI    o
cost study during the term of this contract to determine the actual

cost to University attendant to the production of clincal income.


B I pi ie a --ee_ !!i!.. r__

                       - - - - - - - - - -


          G. In addition to the above, Foundation agrees that it
will reimburse University for all "plan income", as that term is

defined in paragraph II, C., 2 of the plan, paid to faculty by


          A. Consonant with Section II, D. 3 of the "geographic

full-time plan" adopted by University's Board of Trustees on
June 20, 1978, Foundation agrees that it will pay to University,

in recognition of any unreimbursed costs of University not specifi-

cally provided for in Section 5 hereof, and for the purpose of

providing an academic enrichment fund for the College of Medicine

to be used by the Dean of said College in support of the programs

thereof and for related purposes, an amount equal to nine   (9%)

percent of the clinical income collected by said Foundation.

Amounts due hereunder will be computed by Foundation on a monthly

basis as income is received and remitted to University with ten

(10) days after the close of each monthly accounting period.

          B. Foundation further agrees that it will deposit, in

a restricted account maintained by Foundation, on the same basis

as provided in subsection A. hereinabove, an additional amount

equal to one (1%) percent of the clinical income collected by

said Foundation, said restricted account to be used by the Dean

of the College of Medicine for the enrichment of the programs of

the College and for related purposes in his sole discretion.


          A. Foundation's Articles of Incorporation, as filed

with the Secretary of State of the Commonwealth of Kentucky on

_________________  ,19   , have been inspected by the University
as a condition precedent to University's entry into this agree-

ment. Foundation covenants that it will not, absent the written



agreement of the University, amend or otherwise alter said

Articles or adopt any by-law or other operating practice which

would effectively alter the character of said Foundation.

          B. Foundation covenants that it will not engage in the

practice of medicine, nor will it solicit, administer, receive,

perform or accept any gift, grant, devise, bequest, contract or

other arrangement with or from any governmental unit, entity, or

subdivision or any person, corporation, partnership, association

or other entity whatsoever except as specifically permitted herein.+

          C. Foundation covenants that it will not merge with

any other corporation or convey any substantial portion of its

assets to any other corporation, partnership, or other entity ex-

cept as specifically provided herein and that, in the event of

its dissolution its Board of Directors shall cause its assets to

be applied and distributed as follows: (a) all liabilities and

obligations of the corporation shall be paid, satisfied and dis-

charged, or adequate provisions shall be made therefor; (b) assets

held by the corporation upon a condition which occurs by reason

of the dissolution, shall be returned, transferred or conveyed in

accordance with such requirements; and (c) all of the remaining

assets of the corporation shall be transferred or conveyed to

the Board of Trustees of the University of Kentucky, or its suc-

cessor, to be used for medical education and research, if said

Universitv or its successor, shall qualify as a public corporation

and an instrumentality of the State of Kentucky or as an exempt

organization under Section 501(c)(3) of the Internal Revenue

Code of 1954, as amended; and if said Universtv or its successor

shall not so qualify, then to some other organization or organi-

zations organized and operated exclusively for charitable, educa-

tional, or scientific purposes in the field of medicine as shall

at the time qualifv as an exempt organization or organizations

under Section 501(c)(3) of the Internal Revenue Code of 1954,

*Last sentence of B above: Provided, however, that nothing contained
herein shall be construed to prohibit the Foundation (subject to the
approval of the Dean of the College of Medicine) from negotiating and
executing contracts providing exclusively for professional services by
faculty who have executed practice agreements.



as amended.

       - A. University agrees that it will assist the Founda-

tion to enforce the terms of the practice agreements heretofore

entered into by members of University's clinical departments of

its College of Medicine by requiring adherence to said agreements

as a condition of continued employment as a member of-University's

          B. University agrees that it will require, as a condi-

tion of employment as a member of University's faculty in a
clinical department in which a majority of the faculty members have

executed practice agreements, that new members of its faculty

execute said practice agreement in form identical to said agree-

ments heretofore executed or as the form of same may be modified

by mutual agreement of the parties hereto from time to time.

          C. Foundation agrees that it will not absent the written

consent of University, bill for, collect or administer any item

of income for any person or entity not eligible for membership

in the "plan", nor will it permit persons not eligible for such

membership to serve on its Board of Directors, nor will it provide

any benefit or other thing of value to any person or entity not

eligible for such membership except for (i) termination benefits

to formerly eligible members as provided by action of Foundation's

Board of Directors or (ii) incidental benefits indirectly accru-

ing to employees of the Medical Center by virtue of Foundation's


           D. Foundation- agrees that it will strictly enforce the

 terms of its practice agreements, report promptly to University

 in the event any individual fails or refuses to abide thereby

 and join with University in any appropriate action, in law or

 equity, necessary to secure compliance therewith.



Section 9. PERSONNEL

          The parties recognize that Foundation must employ

various.individuals to carry out is functions hereunder; however,

the parties also recognize, and hereby declare their intention

to adhere to, those provisions of the "geographic full-time plan"

adopted by University's Board of Trustees on June 20, 1978, par-

ticularly those portions which provide that University must retain

responsibility and authority for the appointment of faculty and

house staff, the determination of institutional staffing patterns

and the maintenance of balance among programs and their component

activiities. **

          Accordingly, with respect to employment of personnel by

Foundation, the parties agree as follows:

          A.  Foundation staff

               The Foundation may employ an executive director and

such assistants, including secrecarial and clerical personnel as

may be determined by its Board o. Directors to be necessary to

Dermit said Foundation to bill and collect professional fee in-

come and to administer its funds in accord with the terms of the

geographic full-time plan. Such personnel are not expected to

occupy offices at the University Medical Center.

           B. Other personnel

               During the initial term of this contract Foundation

 agrees that it will not employ persons to perform services in

 University's patient care or college programs. Provided, however,

 that this provision shall not be construed to prohibit specific

 agreements between the parties whereby University will employ

 personnel for such service and/or research duties with reimburse-

 ment of salary, fringe benefits and other direct costs by Founda-

 tion.  Where such personnel are employed for service in a sDecific

 departnent cr unmit, employment will not occur unless (i) the

 department or unit where service is to be performed has consented

 **Last sentence in Section 9, first paragraph: In recognition of Uni-
 versitv's interest in maintaining the stability of personnel in the
 various programs in the College-of Medicine, the University may retain
 certain non-faculty personnel on its payroll until a permanent decision
 is reached concerning personnel to be engaged by Foundation. The costs
 --m-eiated with said personnel shall be borne solely by University.



in writing to said appointment, (ii) the Dean of the College of

Medicine has approved the employment and the job description

related thereto and (iii) funds for the salary, fringe benefits,

and other costs related to said employee are either on hand or

reasonably anticipated in the departmental or unit budget.

          C. Equal opportunity-affirmative action

              Foundation agrees that it will not discriminate

against any employee or applicant for employment because of race,

color, religion, sex, national origin, age or handicap.   The

Foundation agrees that it will take affirmative action to ensure

that applicants are employed and employees are treated during

employment, without regard to their race, color, religion, sex,

national origin, age or handicap. Such action shall include,

but not be limited to the following: employment, upgrading, de-

motion or transfer, recruitment or recruitment advertising; lay-

off or termination; rates of pay or other compensation; and

selection for training. The Foundation agrees that it will, in

all solicitations or advertisements for employees, state chat

all qualified applicants will receive consideration For employ-

ment without regard to race, color, religion, sex, national origin,

age or handicap. The Foundation agrees that it will idnemnify

and save harmless the University, the Board of