Dr. Karpf's message to staff

The Past, The Future and My Personal Plans - September 2010


As we prepare for an era of change as our nation moves toward reform of its health care system, we must review where we have been and focus on our future direction. The purpose of this communication is to share with you a high level review of the accomplishments at UK HealthCare over the past six years as well as a discussion of our future strategic direction for the next five years. Lastly, I will share with you my personal intentions and priorities.


At the June 7 retreat of the UK HealthCare Committee of the Board of Trustees, we reviewed our progress over the last six years and set a course for the next five years. 

By coordinating financial, facilities, strategic, and academic planning, we have established a vision of UK HealthCare as a preeminent Clinical Enterprise. We have also come to realize that the vitality and strength of the clinical enterprise will propel the College of Medicine and perhaps other health science colleges to top 20 status among research intensive public academic health centers.

Clinically, we have focused on assuring all Kentuckians access to the best of advanced sub-specialty care. To that end, we have recruited over 150 clinicians while retaining the best of our existing faculty. At the present time, there are a limited number of vacancies in very technically specialized areas that must be addressed.

While emphasizing high-end health care services on campus, we also realized that we had to support regional providers both from a public policy perspective as well as from a business perspective. From a public policy point of view, people want to stay close to home for their health care for as long as possible. Additionally, these rural providers may be quite small by our standards; however, they often are one of the major employers and most important economic drivers in their local communities. Additionally, keeping lower-acuity patients in lower cost facilities rather than forcing them into the higher cost centers of Lexington makes economic sense.

We also recognized that it is critical to demonstrate excellence in patient care quantitatively in our ongoing commitment to efficiency, quality, safety and service.   

Initially we developed an operational model and corporate structure that integrated many functions of the hospital, College of Medicine and faculty practices. Coordinated, centralized strategic and financial planning proved effective and productive. In an effort to further enhance our efficiencies and leverage our resources across the enterprise, two years ago I asked Dr. Richard Lofgren to assume the position of Chief Clinical Officer with operational responsibilities for the hospitals, the outpatient facilities and practices on campus, as well as our clinical outreach endeavors. He strengthened the office of the Chief Medical Officer, recruited superb Associate Chief Medical Officers, reinvigorated and redefined the roles of the Medical Directors to enhance the involvement of the Chairs and faculty. Leadership from the chairs and a fully engaged faculty ensures we provide the highest quality and most efficient care, which will be the key to our success. As we look to the future we must create even more effective operational teams to manage our impressive integrated clinical enterprise. These operational teams need to include faculty, administration and other clinical disciplines. The continued maturation of these relationships must be the centerpiece and cornerstone of what we do to secure our future. 

Our success to date can be measured in multiple dimensions – growth, size, and scope. Over the last six years, our admissions to the hospital system have increased from 19,000 to over 32,000. Additional growth is anticipated for fiscal year 2011 and beyond. I do not personally know of any other academic medical center that has experienced growth of this magnitude. We have gained referrals from every region, in every payor category and in every service line. Our growth in Medicare and commercial patients, individuals who have a choice of provider, has been nothing short of phenomenal. This success is a credit to the faculty and staff. With this growth, our hospital has moved from a 25thpercentile academic medical center in size (AAMC data- using discharges per quarter as the metric) to one that approaches the 75thpercentile.

Additionally the case mix index (CMI) of our patients is at the 75thpercentile of organizations reporting to the AAMC. As we have grown in size, we actually recruited the types of patients we wanted - the most complex, requiring advanced techniques, skills, and modalities. Last year, we engaged Sg2, a consulting firm, to compare the scope of our services and the technology that we employ to six institutions that are excellent academic medical centers that we wish to emulate. Sg2 demonstrated that we compare very favorably and almost indistinguishably with these outstanding medical centers in scope of services and the adoption of new technology.

I feel comfortable in claiming that over the last six years we have matured into a major academic medical center and have become a critically important component of the health care system of Kentucky. We can be proud of what we have accomplished. Now we must aggressively focus on the future not only to stabilize our gains but to continue to move forward and accomplish even more ambitious goals.

Looking forward

The primary drivers for health care reform are access, cost, and quality. The recently passed legislation is essentially insurance reform that substantially, but not completely, addresses the issue of access. Eventually an additional 30 to 35 million people will receive some form of health care coverage. Our country will not have universal coverage but will have made significant progress in that direction. 

Although the need to “bend the cost curve” was vigorously discussed, this legislation did not, in my opinion, effectively address the issue. Nevertheless, no one should be fooled into thinking that we will not ultimately face significant reimbursement challenges. We will likely be reimbursed less for what we are doing now while we will probably have to do more in a much more cost efficient manner in the future. I have no doubt that the financial burden will be pushed to providers by moving additional financial risk to them through a variety of new reimbursement modalities. The bottom line is that health care costs must come down and the government must and will demand more accountability for quality.

Recently, at a national meeting of the National Association of Public Hospitals (NAPH), our colleagues from Massachusetts described their travails. Approximately two years ago, Massachusetts initiated health care reform similar to the legislation the Federal government recently passed. Massachusetts is desperately grappling with cost and budget overruns while they try to revise the delivery model to be more efficient and effective. The providers are facing reimbursement cuts which will be severe if not draconian. Talking to these individuals was sobering. Dr. Zwischenberger attended this meeting with me and if you are not confident that my views represent the reality, I would encourage you to chat with him to hear his perspective.

We can be proud that much has been done, but a great deal still needs to be accomplished to address our future, especially in view of the tumultuousness of health care reform. We came to realize that we must be bold and aggressive in pursuing our goals or chance losing some of our gains. Not being able to predict the future, we must at least identify the basics that we have to address regardless of what changes may occur. From my point of view there are five areas in which we must excel. 

1. Excellence in Quality, Safety and Service. The major thrust of health reform focuses on improved value and accountability in the health care system. In order to demonstrate value it is essential that the quality of care increases while costs decrease. We must excel in quality, safety and service. As an organization we have made great strides in these areas, but other academic medical centers have also focused their energies and we are not yet a benchmark institution in terms of reportable quality measures. We are good but we are not the best and we must be the best.  This will be a fundamental focus of the organization. In order to achieve appropriate progress in these areas we must continue to mature cohesive relations between faculty and administration. 

2. Attract appropriate patients. We must continue to attract appropriate patients to our facilities. I will shortly go into more detail about our market strategies.

3. Operational efficiency. We must have an effective operational model that keeps us appropriately cost effective while maintaining its focus on quality, safety and service. The benchmark and standards for cost effectiveness in the future will be more stringent than in the past. Using UHC data, I can assure you that we are a cost effective organization, approaching benchmark standards. Even more importantly, we have a process in place that will look at all of our operational and clinical functions to make sure that we are doing effective process improvement. I would add that I am quite comfortable that as we get more efficient, we will in fact, improve our quality. I do not think that there is an inherent conflict between efficiency and quality. In fact, improvements in efficiency and quality most often correlate and move together.

4. Appropriate payment. We must be able to contract with commercial insurers effectively so that they recognize and reward us for the size of our organization and the complexity of our patients. Recently, we have had effective negotiations with payors in our market. From the data available to us from UHC we are reimbursed more favorably than in the past, but there is still room for improvement. I am confident that over the next three to four years, with our continued focus and direction, we will get to where we need to be with commercial reimbursement.

5. Effective billing and collection. We must bill and collect effectively. I am pleased to inform you that according to UHC data we are a benchmark organization in our revenue cycle functions.

Strategic Plan

To prepare for the future, we are updating our strategic plan. We feel certain that our focus on advanced sub-specialty care is appropriate and should be continued and enhanced. To that end, we are actively engaged in recruiting a limited number of sub-specialists in areas where we are presently deficient. We think that in the very near future we will have a totally full suite of services comparable to the most outstanding medical centers in our country.

We have also come to realize that we must meet certain volume and outcome targets in these complex sub-specialty areas (destination services) such as bone marrow and solid organ transplantation, pediatric cardiac surgery, etc. These are low frequency medical problems; therefore, we must serve a broad enough geography and a large enough population to achieve appropriate numbers. Doing the math has demonstrated to us that our traditional marketplace encompassing central, northern, eastern and southern Kentucky will be insufficient in the future to achieve adequate case loads. We must aggressively market to patients from Western Kentucky, West Virginia, Tennessee, parts of Virginia and Ohio. The extended marketplace for our “destination services” will be bound by those great medical centers that we believe will be successful in the long haul in maintaining advanced sub-specialty services.

We must demonstrate outstanding outcomes. This will require a committed multi-disciplinary team approach that focuses aggressively on quality and efficiency. Standardization, coordination, and integration will be our core operating principles moving forward.

We have also reaffirmed our regional strategy. We need to continue to mature our relationships with those institutions with which we already have partnered and identify appropriate institutions with whom we must engage. We must help these institutions begin to explore their futures and their strategies to address the changing healthcare marketplace. Different partners may have different needs and ultimate goals and objectives. Some independents may want to stay freestanding, whereas other independents may want to become part of a larger organization. We must accommodate either choice. Other institutions may be part of large “for profit” chains and once again we must figure out how to effectively partner with them. If full or partial capitation reemerges as a significant payment modality, we must understand how to respond accordingly. In brief, our original goal was and must continue to be to develop respectful, mutually beneficial relationships. Our business is about people whether they are patients or partnering providers. Honesty, trust, commitment and communication with our patients and our partners is essential.

Personal intentions and priorities

These last seven years have been the most gratifying of my professional career. I am pleased with the growth of the Clinical Enterprise and I am proud of the exceptional progress we have made in education and research. I personally would like to thank President Todd and the outstanding members of the UK Board of Trustees for their support during this time. Additionally, the support of the Executive and Legislative branches of state government has been exceptional. Most importantly, I cannot thank the faculty enough for their unwavering support.

In my opinion, we have among the strongest finance and operational teams of any academic medical center in the country. Building on accomplishments of Jay Perman and Pete Gilbert, we have an exemplary academic administrative infrastructure that will be solidified with the recruitment of a permanent dean. In view of these strengths, I can more tightly focus my energies in very specific directions. I will maintain a very active and direct role in our strategic initiatives. I feel that I have strong personal relationships with the leadership and medical staffs of our partnering hospitals that will facilitate even closer collaborations in the future. I will also stay directly involved in fundraising efforts. I feel that I have excellent relationships in our community that will be critically important in establishing additional philanthropic support. No academic medical center, irregardless of clinical or research strength, can achieve elite status without the financial support of the community. I will maintain close oversight of our physical plant expansion. I am also committed to working with Provost Subbaswamy to secure additional research space so that we can become a top 20 academic research center as well as a top 20 Clinical Enterprise. Finally, I want to reserve some of my time to devote to health care policy issues and research. I may not have expertise in health policy, but I do have interest, enthusiasm and opinions.

I hope to serve you as EVPHA for five additional years. During that time I will work to help organize a logical and smooth transition. Great institutions plan succession to ensure appropriate continuity while infusing new energy, vitality and ideas. After I step down, I want to work part-time on projects of interest to me.

When I came to Lexington almost seven years ago, I was certain that the University of Kentucky could succeed and that the academic medical center would be at the forefront of UK’s success. Today I am even more confident than ever about the future direction for the University and the academic medical center.

Michael Karpf
Michael Karpf, MD
Executive Vice President for Health Affairs

Dr. Karpf's Previous Messages

A Message from Dr. Karpf - February 2008
A Four Year Retrospective and a Look Toward the Future

A Message from Dr. Karpf - August 2007
A Four Year Retrospective

A Message from Dr. Karpf - February 2007
Recap of Open Forum 

A Message from Dr. Karpf - May 2006
Report on third quarter of fiscal year 2006 

Page last updated: 4/12/2016 4:20:14 PM