Atlanta — April 19, 2000

The final completion of a Master Affiliation Agreement between the Board of Regents and MCG Health, Inc. (MCGHI), approved today by the regents, will result in better positioning of the Medical College of Georgia Hospitals and Clinics for increased competitiveness in the healthcare marketplace.

Dr. Lindsay A. Desrochers, senior vice chancellor for capital resources with the Board of Regents, has been responsible for much of the negotiations that led to today’s approval of the contractual arrangements. Desrochers said the associated agreements should have “long-term impact on the hospitals and clinics’ fiscal health and their strategic positioning as major medical education resources for the state.”

Today’s adoption of seven contractual agreements culminated an effort begun in January of this year, when the Board of Regents first adopted a Master Affiliation Agreement aimed at increasing the flexibility of the Medical College of Georgia Hospitals and Clinics to allow them to become more competitive. That agreement established a cooperative relationship between the Board of Regents and MCG Health Inc., a not-for-profit corporation, in which the Board contracted with MCGHI to operate and manage the Hospitals and Clinics, effective July 1, 2000.

The master affiliation agreement also confirmed MCGHI’s commitment to support the hospitals and clinics’ three-part mission of medical education, research and patient care, including indigent care. In addition, it described the agreements needed to accomplish the transfer of services and responsibilities (adopted today) which included

• a Master Lease of facilities;
• various agreements for transfer of assets and liabilities;
• employee services;
• exchange of operating services, and
• clinical and research program arrangements between the medical college and the hospital and clinics.

“Our goal with these contractual agreements is to provide the hospitals and clinics with greater flexibility to maintain and enhance their patient base for education and research purposes. That is the bottom line,” stated Francis J. Tedesco, president of the Medical College of Georgia. “Our primary consideration has been providing the patient population needed to successfully conduct innovative teaching and research, and that will enable the long-term success of our medical education mission.”

The new agreements will provide MCGHI with more flexibility to hold and reinvest revenues from year to year, which is currently not an option for state agencies and its affiliates; negotiate contracts and joint ventures with other health care organizations; and maintain the patient base needed to support teaching and research.

In the new arrangement, MCG faculty will continue to teach and practice at the MCG Hospitals and Clinics, and students of medicine, dentistry, nursing and allied health services will continue to receive their training at the these facilities as well. The Board of Regents will retain ownership of all facilities occupied by MCG Health, Inc., and will lease the facilities to MCGHI on a long-term basis of 10 years, with three 10-year renewable options. Personnel also will be transferred in the contractual arrangement. Most employees of the MCG Hospitals and Clinics (those with less than ten years of service) will be offered employment with MCG Health, Inc. Those employees with long-term investments in the Teachers Retirement System personnel plan (those with 10 or more years of service), may elect to remain MCG employees, and the Personnel Agreement will provide for MCG to lease their services to MCG Health, Inc.

The seven Associated Agreements adopted by the Board of Regents to accomplish the transfer of responsibility for management of the MCG Hospital and Clinics MCG Health, Inc., includes:

• A Master Lease which provides for MCG Health, Inc. to occupy and use certain clinical facilities on the MCG campus in order to operate the MCG Hospitals and Clinics; approval of sub-leases of portions of those facilities back to MCG; and approval of leases of portions of other buildings to MCG Health, Inc;
• A Clinical, Educational and Research Services Agreement which defines the relationship and responsibilities of MCG and MCGHI in support of the tripartite mission of MCG, which includes teaching, research, and service (patient care).
• An Operations and Services Agreement which defines the services that MCG and MCG Health, Inc. will exchange, and the terms of that exchange, to support the mission of MCG and the operation of the MCG Hospital and Clinics.
• A Personnel Agreement, which covers various groups of employees at MCG Hospitals and Clinics, and their status following the transfer of the hospitals and clinics to MCG Health, Inc.
• A Transfer Agreement which provides for the transfer of appropriate assets and liabilities on the books of MCG Hospitals and Clinics on June 30, 2000, to MCG Health, Inc.
• An Agreement between the MCG Physicians Practice Group (PPG) and MCG Health, Inc. which provides for MCG Health, Inc. to purchase clinical services of MCG faculty physicians and oral surgeons provided in clinical facilities of MCG Health, Inc. PPG acts as the broker of these services for MCG.
• A revised Memorandum of Agreement between MCG and PPG which establishes PPG as a cooperative organization under Regents policies and authorizes PPG to broker faculty physician services for MCG.

In addition, the Board approved amendments to the Master Affiliation Agreement that make it consistent with the Associated Agreements, and also added three members to the MCG Health, Inc. Board of Directors, to be selected by the Governor.

On Monday, the MCGHI board approved these contractual arrangements at their board of directors’ meeting. That action set the stage for the Board of Regents’ approval.

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