Key Takeaways
- The University of Nebraska Medical Center (UNMC) is considering buying out Clarkson Regional Health Services’ share of the Nebraska Medicine partnership for $500 million.
- An additional $300 million would be spent to purchase Clarkson-area properties near UNMC.
- The transaction would give UNMC full control over Nebraska Medicine, but the Nebraska Medicine board would still govern the hospital.
- The deal has received support from Governor Jim Pillen, but the Nebraska Medicine board strongly opposes it.
- The university plans to use a combination of private funding, debt service, and public dollars to cover the cost of the transaction.
Introduction to the Proposed Transaction
The University of Nebraska Medical Center (UNMC) is considering a major change in its partnership with Clarkson Regional Health Services, its private partner in providing medical care and hospital services. Clarkson has offered to sell its share of the Nebraska Medicine partnership to UNMC for $500 million, with an additional $300 million to be spent on purchasing Clarkson-area properties near the university. The deal, which is set to be considered by the NU Board of Regents on January 9, has already received significant political support, including from Governor Jim Pillen, a former NU regent. However, the Nebraska Medicine board has expressed strong opposition to the change, citing concerns about the potential impact on patients, clinical experts, and the future of the hospital.
Governance Structure and Patient Care
According to Dr. Jeffrey Gold, president of the NU system and a former UNMC chancellor, the key difference resulting from the transaction would be a change in Nebraska Medicine’s governance structure, shifting from two owners to one. However, Gold emphasized that patients would see no changes in the care or cost of medical care they receive at a Nebraska Medicine clinic. The health care workforce support structure, which stretches "border to border," would also remain unchanged. Gold noted that many Nebraskans already assume UNMC runs the Med Center and are unaware that Nebraska Medicine’s clinics have involved Clarkson as a private partner since 1997.
Benefits of the Transaction
Gold believes that UNMC and the NU system would benefit from joining top fellow academic medical centers, such as the University of Iowa, the University of Michigan, and Ohio State University, which oversee the clinical and hospital side of respective medical nonprofits. The new-look Nebraska Medicine would still be governed by the Nebraska Medicine board, not the NU Board of Regents, with a duty to ensure the hospital provides quality care to patients. The transactions would also help UNMC consolidate Clarkson properties around the Med Center campus, where growth and construction are ongoing. Additionally, Clarkson has pledged a $200 million gift to help replace the core hospital building at 42nd and Dewey Streets.
Financial Implications
The university plans to use a combination of private funding, debt service, and public dollars to cover the cost of the transaction. Gold expects the combination of revenues from Clarkson properties, debt service, and some public dollars to be used to cover and recoup the $500 million. He emphasized that none of the public project funding would pull from the budgets of other NU campuses. Considering the quality of health care offered at Nebraska Medicine, Gold believes that some of the revenue streams provided by Nebraska Medicine could help keep NU tuition more affordable than it might be otherwise.
Opposition from the Nebraska Medicine Board
The Nebraska Medicine board has strongly opposed the change, with chair Lance Fritz criticizing NU for trying to make the nonprofit public-private partnership into a public medical provider. Fritz believes that becoming a state-controlled health system is unnecessary and not in the best interest of patients, clinical experts, and health care in Nebraska. The board is pursuing all actions necessary to prevent a state takeover. Mogens Bay, vice chair of the Nebraska Medicine board, also expressed concerns about the timing of the transaction, given the university’s current budget crisis.
Clarkson’s Future Plans
Clarkson appears poised to transition from its longtime focus on providing health care to using funds from the sale to grow a private foundation focused on grants aimed at making Nebraska the healthiest state and improving how health care is delivered. Jim Landen, chairman of the Clarkson board, expressed pride in the partnership with the university and the advancements made together in serving the community. Dr. Bill Lydiatt, CEO of Clarkson, is excited to give to its longtime partners at NU and provide them with the best path toward continuing the important work of Nebraska Medicine.
Conclusion
The proposed transaction between UNMC and Clarkson Regional Health Services has significant implications for the future of health care in Nebraska. While the deal has received support from Governor Pillen, it has also faced opposition from the Nebraska Medicine board. The university plans to use a combination of private funding, debt service, and public dollars to cover the cost of the transaction. If approved, the deal would give UNMC full control over Nebraska Medicine, but the Nebraska Medicine board would still govern the hospital. The outcome of the transaction will depend on the decision of the NU Board of Regents, which is set to consider the deal on January 9.