Development of an Integrated Academic Health System

KU, KUH, and UKP were separate legal entities seeking assistance to develop, vet, and ultimately select and implement a new model for their clinical enterprise with the goal of greater alignment. The current state was highly complex and included 18 independent clinical foundations representing more than 700 providers across individual clinical departments. The parties were seeking a model that would provide a more strategically, financially, and clinically integrated clinical enterprise as well as more effectively sustain the tripartite mission of the AMC.

Key project activities completed by ECG included: 

• Assessing current performance, identifying variation in operating results, and establishing key performance indicators to target for measurement and review.
• Developing four clinical model options and soliciting feedback regarding the preferred model from the three principal parties.
• Conducting high-level financial analysis to gauge the feasibility of the structural proposal.
• Collaborating with legal representation of each party and jointly retained council to develop definitive agreements regarding the new entity.
• Facilitating negotiations and due diligence between the principal parties.
• Redesigning enterprise-wide funds flow arrangements to reflect the new organizational structure.
• Facilitating a planning process for primary care that aligned community group–based activities with those of the faculty practices.
• Leading integration of the community-based, hospital-employed physician practices within the new ambulatory division.
• Developing shared and core services in support of the ambulatory environment.
• Providing interim executive leadership of the ambulatory enterprise.

The new University of Kansas Health System was born out of the four-year integration process. This contemporary model for KU’s clinical enterprise included the dissolution of the 18 foundations and the establishment of a single, integrated multispecialty physician organization with a lean governance and management structure, as well as new financial arrangements with the medical school and teaching hospital.

Among other features, this new system included a complete redesign of funds flow between the health system and new physician organization as well as the health system and university. The arrangement with the physician organization included the pooling of health system clinical revenue and an internal performance-based payment to the group for quality, productivity, and cost efficiency. The university–health system arrangement included a base and variable component that is tied to the overall performance of the health system.

The newly established faculty group practice allowed the health system to effectively standardize clinic operations; improve performance and optimize shared services; and seamlessly integrate community-based, hospital-employed physician practices.