University Medical Foundation

University Medical Foundation (UMF), Inc., is a not-forprofit

corporation formed by physicians in the College of Medicine at

Southeastern University. UMF, with over 600 physicians, provides the

medical staff for University Hospital. In addition, UMF staffs and administers

a network of 25 ambulatory care clinics and centers at ten

locations within 50 miles of the hospital. In 2002, UMF generated over

$500 million in revenues from about 40,000 inpatient stays and 750,000

outpatient visits.

Over 70 percent of UMF’s revenues currently come from inpatient

stays, but this percentage has been declining, and by 2005, over half of

UMF’s revenues are expected to stem from outpatient services. As improvements

are made in technology and third-party payers continue to

pressure providers to cut costs, more and more inpatient services will

be converted to outpatient and home care. For example, in 1992, 80

percent of UMF’s ophthalmological surgeries took place in University

Hospital, while in 2002, 80 percent were conducted in outpatient settings.

Although UMF has traditionally provided only specialty services, in

1998 it instituted a “personal physician services” program, in which

patients can receive both primary and specialty care from College of

Medicine physicians. This was the first step in UMF’s drive to develop

an integrated delivery system, which offers a full range of patient services.

Now that the system is in place, UMF is contracting with managed

care plans to provide virtually all physician services required locally

UNIVERSITY MEDICAL

FOUNDATION, INC.

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92 Cases in Healthcare Finance

by plan members. Furthermore, UMF is examining the feasibility of

contracting directly with employers, and hence bypassing managed care

plans, but no decision has yet been made. Indeed, state insurance industry

representatives expressed opposition to the idea when UMF first

announced the possibility of direct contracting. The insurance industry

position is that direct contracting with employers to provide a complete

healthcare benefit package is an insurance function, which can

be undertaken only by licensed insurance plans.

As part of its continuing education program, UMF holds monthly

“nonclinical grand rounds” for its physicians, in which various staff

members and outside specialists conduct