Two Omaha, Neb., hospitals last week ended two years of squabbling over ownership rights by agreeing to combine their separate corporations under a new joint operating company.
The two not-for-profit hospitals involved are 343-bed University of Nebraska Medical Center and 201-bed Bishop Clarkson Memorial Hospital.
Since mid-1995, they've been arguing in court about the validity of a 44-year-old agreement that gives UNMC first dibs on Clarkson in case of a sale. It came up in 1995 when Clarkson negotiated an $84 million sale to for-profit Columbia/HCA Healthcare Corp. and UNMC asserted its right of first refusal.
Clarkson canceled the sale to Columbia but continued litigation over the 1953 agreement. The hospitals began discussing a settlement last fall after a change of leadership at the university (Dec. 9, 1996, p. 17).
Under a settlement unveiled last week, UNMC and Clarkson plan to create a private, not-for-profit organization to manage and consolidate their clinical operations. The hospitals are within blocks of each other on the same street in Omaha.
UNMC and Clarkson would co-own the new company, tentatively named Medical Center Hospitals Corp. Each hospital would have six members on the company's 12-member voting board. Nonvoting members would include the new company's chief executive officer and the university medical school dean.
When UNMC's right of first refusal was first asserted, Clarkson rejected an outright sale to the university. Physicians and the Clarkson board believed its mission as a private community hospital would be threatened in a sale to the academic medical center, said Robert Omer, Clarkson's chief operating officer. "The feeling is that this joint operating company will preserve that role," Omer said.
The board of regents of the University of Nebraska, which controls UNMC, will consider the joint operating agreement at an April 15 meeting. Clarkson's board approved a letter of intent last week. Both boards will review a final agreement.
Hospital officials said they don't believe they need state approval to carry out the deal but they are discussing the matter with legislators. The university is state-owned.
The new organization would control about 27% of the market in a 120-mile radius of Omaha. Alegent Health, a six-hospital system based in Omaha, still controls about one-third of that market.
Richard Hachten, Alegent's president, said the end of the dispute would be good for the community. Alegent once wooed UNMC, but that deal was killed in the face of physician opposition.
As for the 1953 agreement, Omer said it would be void after five years of the joint operating arrangement. "The hope and expectation of both parties is that this agreement will continue far into the future," he said. "But if it doesn't work out, it's important that Clarkson's hands aren't tied by a very old agreement that was (designed) for a different time and place."