ANN ARBOR—The University of Michigan Board of Regents, at its May 18-19 meeting, approved the proposed purchase and expansion of the Williamsburg properties near the Briarwood Mall, as part of the U-M Medical Center‘s long-term commitment to provide high quality, cost effective health care in the community.

Major elements in the proposal include the acquisition of the five medical office buildings at a price of $9.875 million and the acquisition of a lot including the two buildings to be constructed at a cost of $2.8 million.

The Medical Center now leases either all or the major portion of the five buildings, said U-M Executive Vice President Farris W. Womack and John D. Forsyth, executive director of the U-M Hospitals. ” Briarwood Family Practice, located in one of the buildings, has been closed to new patients since April 1993 due to space constraints.

“Although a federal health care reform plan has yet to materialize, significant changes in the marketplace already have taken place. Clearly, the movement toward managed care is continuing, and cost—without sacrificing quality—is the impetus. The American College of Health Care Executives believes that primary care physician networks, comprised of outpatient treatment settings, will be the cornerstone of the new health care system.

“Satellite centers, like the Williamsburg properties, provide better access for patients and help create a seamless health care delivery system in a low-cost setting. Over 70,000 patient visits occur at the Williamsburg site annually. ”

Womack and Forsyth noted that the University has carefully considered a number of issues and alternatives before presenting the proposal to the Regents. ” First of all, purchase costs would match lease payments for these sites in just 11 years. Since the Medical Center intends to make a long-term commitment to servicing residents in this part of Washtenaw County, it seems far more prudent to have those payments result in an asset.

“Purchasing the existing facilities is also far more efficient than constructing new. The present value for the expected purchase outlay over the next 11 years is only two- thirds of the cost that would have been incurred had the University chosen to construct new facilities. ”

U-M officials noted that ” if we are not successful in patient care in the long run, we will not be successful in education and research. We have read the stories of our peer institutions that reveal the scope of change and the particular adverse consequences for academic medical centers that do not adapt.

“In order to control the rapidly increasing costs of medical care, it is essential that we prioritize our expenditures and manage our assets as efficiently as possible. ”

(A-16)