The University of Missouri says it will consider "possible business relationships" for the University of Missouri-Columbia Hospitals and Clinics, including selling the 500-bed complex.
University President George A. Russell said the board of curators, "who represent the state's citizens, are convinced that UMCHC cannot afford to be isolated in today's competitive climate."
Adjoining its medical school in the center of the state, the Columbia-based university staffs 500 beds in four hospital settings that employ 2,500 people.
The Teaching hospitals medical center earned $14 million on $201 million in revenues in 1994.
The university believes it faces $120 million in capital needs over the next five years. It must build a new outpatient clinic, replace 54 intensive-care beds and reconstruct the newborn intensive-care unit. It also must upgrade its information systems and buy new equipment.
The curators are wondering whether these obligations might not better be undertaken by private organizations. They have retained investment bank Morgan Stanley to advise them.
The university will soon issue an "offering memorandum" to interested organizations, inviting them to make proposals about the hospital. Seven hospital groups have already been contacted: in Kansas City, Health Midwest and St. Luke's Health System; in St. Louis, BJC Health System, SSM Health Care System and Sisters of Mercy Health System; and two national for-profit companies, Tenet Healthcare Corp. and Columbia/HCA Healthcare Corp.
Several of those organizations already have established relationships in the mid-Missouri market, which is unusually well-endowed with hospital beds. Boone Hospital Center in Columbia is part of BJC, and Columbia (Mo.) Regional Hospital is owned by Tenet.
SSM has had a market presence for 90 years with St. Mary's Health Center in Jefferson City. "The central Missouri market is very critical to us," said Dixie Platt, system spokeswoman. "I would expect that we will respond to this offering memorandum, and we would evaluate ways to relate to the university."
Health Midwest has had a long-term strategic relationship with the university hospital. "We want to take a hard look at how we can be of help to them," said Richard W. Brown, Health Midwest's president and chief executive officer. "The strategic criteria would be more important to us than the financial ones" in terms of managed-care relationships and statewide networking.
"As I understand it, they're not committed to anything. They simply want to find out what people would offer in ownership, partnerships, joint-venture options, pretty much an open field of alternatives," Brown said. He added that antitrust rules could play a role in which organization's proposal is accepted.
The university has stipulated that any partnership would have to preserve the medical school's academic privileges and sustain relationships with rural hospitals in the state. One of the medical school's main missions is to provide primary-care doctors for rural areas and treat indigent patients.