The Children’s Hospital at OU Medical Center in Oklahoma City. COURTESY/OU Medicine.
The state agency and public trust that oversee the University of Oklahoma Medical System is asking the Oklahoma Supreme Court to approve a deal turning operations and some ownership of the system over to a recently-formed nonprofit organization.
If approved by the court, the merger agreement would allow the nonprofit organization, OU Medicine Inc., to take over ownership of most of the hospitals and clinics that are part of the OU Medical System, currently owned by the for-profit Hospital Corp. of America, as well as take over management of the medical system from HCA.
The Oct. 31 filing by the University Hospital Authority and Trust states it hopes to finalize the agreements by Dec. 31, if approved by the State Supreme Court.
OU Medicine, Inc., which was formed in May by the public trust University Hospitals Trust, would also pay HCA $750 million as part of the deal, according to court documents.
The $750 million payment to HCA will come from long-term bonds issued by OU Medicine, Inc., which will use hospital revenue as the necessary financial support, and the bonds will not be the responsibility of the state, according to a statement from OU Medicine.
The OU Medical System includes the 680-bed OU Medical Center in Oklahoma City, The Children’s Hospital at OU Medical Center, OU Medical Center Edmond, Edmond Physician Services, Edmond Podiatry, Edmond Spine, Oklahoma Transplant and Family Medicine Associates.
“We are excited about this new chapter in Oklahoma health care and the tremendous promise it holds for our patients and the quality of life of all Oklahomans,” a statement from Oklahoma Medicine, Inc., read. “Profits from the newly formed organization will be kept here in Oklahoma and reinvested in the highest quality patient care, new treatments and cures, and expanded training of future physicians, nurses, and other critical health professionals. The health system’s mission will continue to be leading health care in education, research and patient care, and this transaction will help us fulfill and advance that important responsibility.”
The two buildings that make up the Children’s Hospital are owned by the University Hospitals Authority, a state agency. The University Hospitals Trust was established in 1997 by the Authority in 1997 in order to enter into a joint operating agreement with HCA the following year.
OU Medical Center (formerly Presbyterian Hospital) and the Edmond properties are all owned by HCA.
The agreement allowed the Trust to receive rent and a cut of the revenue generated from services provided under the management of HCA at the facilities, while also fulfilling the mission of the University Hospital’s Authority by providing health care for the indigent, teaching and training facilities for University of Oklahoma medical students, and medical and biomedical research by faculty at the OU Health Sciences Center.
Under the proposed merger, OU Medicine would take over ownership of the HCA properties and assume management of the OU Medical System while HCA, after a brief transition period, would no longer be involved, court records state.
According to the court documents, the University Hospitals Authority would enter into a 50-year lease agreement with the Trust, and the trust would enter into a sublease agreement with OU Medicine for a one-time payment of $1.
The Trust would receive $40 million annually from OU Medicine, and the nonprofit would continue to provide the same level of indigent care and make facilities available for teaching, training and research, the documents state.
In addition, OU Medicine will be governed by a 15-member board of directors — five of which would be University Hospitals Authority and Trust board members, five others would be appointed by the University of Oklahoma, four would be “community members” selected by a nominating committee and one would be the CEO of OU Medicine.
OU first announced HCA would no longer be managing operations at the OU Medical System in October 2016. However, a deal with the Catholic health care company SSM Health to take over operations under a similar joint operating agreement fell through earlier this year.
The plan to form a nonprofit to manage the health care system was first announced in August by the OU Board of Regents, but had several hurdles to clear before being finalized. However, most of the required approvals have been obtained, and the University Hospitals Authority and Trust hopes to finalize the agreements by Dec. 31.
