A visionary plan to transform the future of health care in Nebraska

On Jan. 9 the Board of Regents will consider a historic and exciting strategic transaction that will greatly benefit the citizens of Nebraska by helping to transform Nebraska’s health care through education, research, and extraordinary patient care. This transaction represents the logical next step in the overall vision to create the world’s best healthcare system in Nebraska.

A detailed fact sheet on the transaction is attached below, but the main highlights are as follows:

• Some time ago Clarkson Regional Health Services let the University of Nebraska and Nebraska Medicine know that they plan to resign their 50% membership rights in Nebraska Medicine. This decision followed internal strategic planning initiatives about the future of Clarkson Regional Health Services. Clarkson Regional Health Services will resign their 50% membership, leaving the University of Nebraska as the sole (100%) member of Nebraska Medicine. In exchange for Clarkson’s withdrawal and resignation of its membership interest, the University of Nebraska would pay Clarkson $500 million. The University would also purchase land and buildings that have continued to be owned by Clarkson since the partnership commenced in 1997 for its appraised fair market value, expected to be approximately $300 million.
• As part of this transaction, Clarkson Regional Health Services will also donate $200 million to the University of Nebraska, which would represent one of the largest philanthropic gifts in the history of the University. This historic donation would be used to support Project Health, the ongoing facility replacement project on the Omaha campus.
• There will be no changes in Nebraska Medicine’s extensive ambulatory and inpatient day-to-day operations, services, or staff because of the transaction, only future growth. Nebraska Medicine will remain a nonprofit world class academic medical center.

“This is truly a transformational and historic moment for all Nebraskans,” said University of Nebraska President Jeffrey P. Gold, MD. “This transaction will directly benefit our state by bringing better health care and transformational new health care services to the citizens of Nebraska. This initiative is part of our broader health care vision to transform lives and create a healthy future through education, research, and extraordinary patient care. I am grateful to the Board of Regents for their hard work and leadership to help make this vision a reality.”

“The Board of Regents is proud to consider this visionary initiative and believe it represents the logical next step in the overall plan to create the world’s best healthcare system in Nebraska,” said University of Nebraska Board of Regents Chairman Paul R. Kenney. “The Board of Regents has an important responsibility to do everything possible to help strengthen our university system and deliver benefits to the residents of Nebraska. The structure that is being proposed has been proven to help deliver better health care for citizens where it has been put into action. Peer academic medical center institutions across the country have similar structures that provide an equivalent to the University of Nebraska as the controlling body of both the clinical enterprise and academic teaching centers, including certain institutions within the Big 10 such as Michigan State University, the University of Iowa, The Ohio State University, The University of Washington, and The University of Michigan. Across the country this structure is prevalent, including most noteworthy at the University of Texas and its related hospitals, including M.D. Anderson.”

“I strongly support this transaction because it will directly benefit the citizens of our great state by bringing them better health care and by further strengthening the University of Nebraska system,” said Nebraska Governor Jim Pillen. “Nebraskans are counting on leaders at all levels across our state to do everything possible to help improve their lives, and especially their health care. This transaction will do just that, and will ensure this tremendous public asset remains fully under Nebraska leadership. I am proud to support President Gold and the Board of Regents.”

Specific details on the initiative are below.

Fact Sheet

A Visionary Plan to Transform the Future of Health Care in Nebraska

On Jan. 9 the Board of Regents will consider a truly historic and exciting strategic transaction that will greatly benefit the citizens of Nebraska by helping to transform Nebraska’s health care through education, research, and extraordinary patient care. This transaction represents the logical next step in the overall vision to create the world’s best healthcare system in Nebraska.

Facts on the Proposed Transaction:

Current Structure and History. The University of Nebraska and Clarkson Regional Health Services each currently hold 50% membership rights in an entity known as Nebraska Medicine, a nonprofit organization initially created by the two parties in 2016 with a specific mission to help provide the best health care possible to the citizens of Nebraska. The University of Nebraska and Clarkson Regional Health Services have worked in close partnership since the 1950s with their important shared mission to build a world-class healthcare system and academic medical center for the citizens of the State of Nebraska and well beyond. In fact, Clarkson’s history dates to 1869 when Bishop Robert H. Clarkson and his wife established one of the first hospitals in Nebraska – Bishop Clarkson Memorial Hospital. This hospital, long revered for its leading innovation, moved to its location at 42nd and Dewey streets in the 1950s, specifically to provide academic teaching opportunities for the faculty and students at the University of Nebraska Medical Center (UNMC).  The University of Nebraska Medical Center and Clarkson Regional Health Services have been partners ever since, including forming what is now known and highly respected internationally as Nebraska Medicine.

Nebraska Medicine and UNMC – a Shared and Growing Commitment to Transforming Lives and Building the Future of Health Care. Since 2016, Nebraska Medicine and UNMC have become increasingly integrated. Nebraska Medicine serves as the primary teaching site for UNMC’s educational programs, and Nebraska Medicine and UNMC have a shared foundational mission to transform lives and create a healthy future through education, research and extraordinary patient care.

Most Nebraskans already think of Nebraska Medicine and UNMC as unified and aligned organizations, and they are indistinguishable to the public. In fact, Nebraska Medicine and UNMC already share a logo and identity, and campus facilities are co-located on a campus that consists of clinical, research, educational, administrative and support facilities. Many of UNMC’s faculty are also physicians at Nebraska Medicine, dually employed by both Nebraska Medicine and UNMC.

Nebraska Medicine and UNMC have also jointly unveiled their aspirations for the next generation of Nebraska’ academic health system through Project Health which represents the creation of Nebraska’s largest teaching, clinical research and clinical health care facility. Project Health will serve as the primary inpatient hospital for Nebraska Medicine, the training ground for UNMC’s next generation of Nebraska’s health care professionals and will provide significant economic growth potential for Nebraskans and satisfy Nebraska’s growing workforce demands.

Proposed Transaction. This transaction represents the logical next step in the overall vision to create the world’s best healthcare system in Nebraska. The transaction is simple:

• Some time ago Clarkson Regional Health Services let the University of Nebraska and Nebraska Medicine know that they plan to resign their 50% membership rights in Nebraska Medicine. This decision followed internal strategic planning initiatives about the future of Clarkson Regional Health Services. Clarkson Regional Health Services will resign their 50% membership, leaving the University of Nebraska as the sole (100%) member of Nebraska Medicine. In exchange for Clarkson’s withdrawal and resignation of its membership interest, the University of Nebraska would pay Clarkson $500 million. The University would also purchase land and buildings that have continued to be owned by Clarkson since the partnership commenced in 1997 for its appraised fair market value, expected to be approximately $300 million.
• As part of this transaction, Clarkson Regional Health Services will also donate $200 million to the University of Nebraska, which would represent one of the largest philanthropic gifts in the history of the University. This historic donation would be used to support Project Health, the ongoing facility replacement project on the Omaha campus.
• Governance. The proposed transaction will alter the current corporate structure of Nebraska Medicine as there will be a single member rather than two. Nebraska Medicine will continue to be a nonprofit corporation. There will be no changes in Nebraska Medicine’s extensive ambulatory and inpatient day-to-day operations, services, or staff because of the transaction, and Nebraska Medicine will remain a nonprofit world class academic medical center.

Important Context for This Transaction. There is strong successful precedent nationwide for the enhanced structure that is being proposed with this transaction. This structure has been proven to help deliver better health care for citizens where it has been put into action. Peer academic medical center institutions across the country have similar structures that provide an equivalent to the University of Nebraska as the controlling body of both the clinical enterprise and academic teaching centers, including certain institutions within the Big 10 such as Michigan State University, the University of Iowa, The Ohio State University, The University of Washington, and The University of Michigan. Across the country this structure is prevalent, including most noteworthy at the University of Texas and its related hospitals, including M.D. Anderson.

Strategic Benefits for This Transaction:

This transaction will bring better health care and powerful and transformational health care services to the citizens of Nebraska. Specific benefits include:

• Enhancing World-Class Education, Biomedical Research, and Advanced Clinical Care. Following the proposed transaction, University of Nebraska Medical Center (UNMC) and Nebraska Medicine will be able to further align their strategic priorities and strengthen their shared mission, which will ultimately benefit the citizens of the State of Nebraska by expanding and enhancing world class education, biomedical research and the highest levels of advanced clinical care.
• Developing Nebraska’s Health Care Workforce of the Future. The health care needs of Nebraskans are only going to grow given today’s megatrends, and this transaction will help address Nebraska’s workforce demands by furthering a shared vision to optimize pre-health profession workforce development, experiential learning and the critical pipeline of future employment needs of the entire State of Nebraska.
• Building on the Powerful Brand. The proposed transaction will further support alignment of the shared iconic brand and the global perception that UNMC and Nebraska Medicine are both part of one and the same organization, the University of Nebraska.
• World-Class Medical Faculty with Fully Aligned Incentives and Goals. The transaction will also serve to best reflect the core values of the academic health professional faculty who are currently dually employed by providing fully aligned incentives and performance goals.
• Increased and Better Recruitment and Retention. The transaction will help facilitate streamlined decision making for faculty and staff recruitment and retention as well as accelerate statewide programmatic and facility growth within both Nebraska Medicine and UNMC.
• Better and More Efficient Use of Precious Philanthropic Resources. Unification with the University of Nebraska will demonstrate alignment and unity to the philanthropic community. This is important because generous Nebraskans have invested hundreds of millions of dollars into programs and services that are shared by Nebraska Medicine and UNMC. For example, UNMC and Nebraska Medicine have announced their desire to transform Nebraska’s state of care through Project Health. Further alignment between UNMC and Nebraska Medicine because of the proposed transaction will accelerate the planning, construction and future operations of Project Health. This will mean that these precious philanthropic resources will be used more efficiently.
• Greater Financial Strength and Stability for Nebraska Medicine. The transaction will offer great financial strength, stability, and efficiencies for Nebraska Medicine. Nebraska Medicine, with the University of Nebraska as its sole member, will provide a common organizational structure that is familiar to national credit markets and national rating agencies. At present, Nebraska Medicine has limited debt capacity, and its membership and governance structure is often confusing in the financial markets. Further alignment with the University of Nebraska will provide Nebraska Medicine with enhanced debt capacity that will provide access to capital needed for future improvements and growth and a governance model well known to the credit markets.