Columbia/HCA Healthcare Corp.'s affiliation agreement with the Medical Center of the Medical University of South Carolina in Charleston could cost the for-profit hospital chain more than $1 billion over the course of the proposed 30-year lease.
The university's board of trustees approved the affiliation agreement on Feb. 9 after more than four months of exclusive negotiations with Columbia (Sept. 25, 1995, p. 19).
The agreement is expected to be completed by July after it is reviewed by several state education and finance governmental bodies.
In a newsletter to university employees, James Edwards, the institution's president, said the financial arrangements with Columbia "will provide financial stability for our academic and research programs, as well as significantly broaden and strengthen our services to patients."
Under the agreement, Columbia will:
Pay the university more than $90 million for the assets of the 582-bed teaching hospital.
Make $45 million in capital improvements to the facility over the first seven years of the agreement.
Donate $15 million to $22 million annually to the university to support its medical education programs.
Lease the facility from the university for $8 million a year.
Spend $7.5 million annually over the first 10 years of the agreement to improve clinical programs.
In total, the package is worth about $1.11 billion over the 30-year lease, which is composed of a 20-year lease with two five-year extensions.
In the fiscal year ended June 30, 1995, the hospital generated about $403.1 million in patient charges.
Columbia would operate the hospital, but the university board would have the authority to appoint the hospital's chief executive, approve the hospital's budget and oversee medical staff appointments.