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Regents Approve Memorandum of Understanding With MCG Health, Inc.

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Atlanta — July 8, 1998

In a move aimed at enhancing competitiveness and ensuring the continued viability of the teaching mission of the Medical College of Georgia, the Board of Regents today (July 8) approved the signing of a Memorandum of Understanding with MCG Health, Inc., a non-profit governing body that will have increased responsibility for the college’s healthcare delivery systems.

The agreement facilitates an operational structure under which MCG Hospital and Clinics will be enabled to operate in a similar manner to other health care operations, strengthening MCG’s position as a health care leader and as major patient referral center in the Southeast.

The new governance structure will enhance the viability and competitiveness of the College’s healthcare delivery components by facilitating joint ventures and other effective partnerships that would expand access to high-quality medical care to the state’s citizens.

“The Board of Regents and the chancellor both recognize the tremendous challenges confronting academic medical centers in the rapidly changing healthcare industry, and their action today reflects the need to be responsive to those challenges,” said Dr. Lindsay Desrochers, senior vice chancellor for capital resources for the Board of Regents. “We fully support President Fran Tedesco in his efforts to develop a more flexible management structure for his clinical operations that will result in an enhanced health care delivery system for the citizens of this state and a state-of-the art teaching environment for the University System’s medical and health science students. The sooner that we implement these improvements, the stronger MCG will be in the marketplace.”

Today’s action by the Board of Regents, which will ultimately transfer management of MCG’s hospital and clinics to MCG Health, Inc., presents several benefits. A contract between the Board of Regents and MCG Health, Inc. now may be developed regarding the management operations of the Hospital. MCG Health, Inc. will be charged with exploring options for management, including the authority to enter into joint ventures, form partnerships with other organizations, gain access to adequate patient volume, enter into multi-year contracts, accumulate reserves, borrow capital to finance improvements, invest in capital improvements and new technology, accept and manage risks in a competitive manner, and align and integrate the hospital and physicians.

Next steps to be taken include reshaping the existing seven-member board of directors of MCG Health, Inc. to include members of the Board of Regents, public representatives with healthcare and business industry experience, and campus representatives. The expanded eleven voting members of the board will include four members of the Board of Regents and the chancellor or his delegate, the president of MCG, three business professionals, the dean of the MCG School of Medicine, and the president of the MCG Physician’s Practice Group. Ex-officio members will include the executive director of the MCG Hospital and Clinics, the executive director of MCG Health, Inc., and the chief financial officer of MCG Hospital and Clinics. An initial responsibility of the MCG Health, Inc. board will be to identify a chief executive officer to manage MCG Health, Inc.

The entire organizational transition is expected to unfold over an 18-month timeframe, with consultation and deliberation with appropriate state officials.

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