Consistent with previous practice, about two-thirds of the University's overall capital plans will be funded through sources other than bonding. Although the medical center has shown consecutive years of profitable operations, Moody's believes it is not immune to the rapidly changing health care industry that encompasses both strategic and reimbursement challenges. On a more immediate front, we believe management will be challenged to recruit additional clinical personnel, namely intensive care and surgical nurses, given the tight labor environment in Charlottesville. Future staff additions remain integral to supporting the university's advances in clinical research. Finally, while the medical center has not lost market share in recent years, and remains the largest provider in both Charlottesville and its service area with over 28,000 admissions, Moody's believes competitive threats cannot be dismissed.
Management reports that all managed care contracts are profitable on a total cost basis.
Prior plans to sell the health plan were aborted as new management was hired to address the financial issues. A possible sale of the plan has not been ruled out. Losses on the HMO and other joint ventures have only partially been offset by investment income, suppressing net income levels through FY 1999, with some improvement in FY 2000. Likewise, we gain some comfort that University management continues to rebuild some of its key services, including obstetrics, surgery and orthopedics, that have shown some decline in volumes in recent years. Further changes in the administrative structure of the University, including the addition of four non-voting experts in the field of health services management to the Health Affairs Committee Board of Rectors, play a key role in our confidence that the University will keep a close eye on its exposure to health care risk.