HCHD and Memorial Hermann Announce Proposed Plan for the Purchase of Memorial Hermann Southwest Hospital by HCHD

HOUSTON, August 6, 2009 – With one of the highest concentrations of uninsured and underinsured individuals in the nation, Harris County has gained national attention for its critical healthcare needs. In response to those needs, Harris County Hospital District and the not-for-profit Memorial Hermann Healthcare System have been working together to consider strategies to add capacity and expand access to medical care for the uninsured and underinsured. Today, Harris County Hospital District and Memorial Hermann announced that they have agreed to key elements of a proposed transaction that will result in the sale of Memorial Hermann Southwest Hospital and related facilities to the Hospital District.   

Details of the  proposed transaction and financial terms will be finalized in the coming weeks after performing all due diligence and after the subsequent approval by the appropriate governing bodies of Memorial Hermann, Harris County Hospital District and Harris County Commissioner’s Court. The pending purchase by the Hospital District will not result in increased taxes. The Hospital District would operate the facility as a full-service hospital and would continue to serve Medicare, Medicaid and privately insured patients, as well as the uninsured.  In the event that the purchase is approved, Memorial Hermann will provide certain operational services to Harris County Hospital District in support of the campus under a separate services agreement. The acquisition is targeted to close by late November 2009.

The Memorial Hermann system and the Harris County Hospital District operate the county’s only two Level 1 trauma centers. Together, they have historically provided the bulk of healthcare services to the county’s uninsured.

The Harris County Hospital District recently embarked on a major, multi-phase capital construction plan that would invest more than $350 million in new facilities, expansion and land acquisition to meet the growing need for primary care by the county’s underserved population. Plans called for construction of two community health centers and eligibility centers, two ambulatory care towers, and renovation and expansion of the LBJ General Hospital Emergency Center.

“Patient visits to the recently opened El Franco Lee Health Center and Southwest Eligibility Center in the Alief area of Houston have far surpassed our projections,” said David Lopez, CEO, Harris County Hospital District. “This led us to reconsider our planned construction of an ambulatory care tower on Holly Hall Street, and begin to carefully consider if there were advantages of immediately adding inpatient and specialty care capacity on the southwest side of Houston. Ultimately, our deliberations led us to approach Memorial Hermann regarding its Southwest hospital, which would be a more efficient use of our resources and a more immediate solution to address capacity issues. As a result, when the transaction becomes a reality, we will forego construction of the ambulatory care center on our Holly Hall campus.

One of Houston’s largest and most sophisticated suburban hospital campuses, Memorial Hermann Southwest includes a hospital building, four medical office buildings, a Heart & Vascular Institute, an accredited Cancer Center, a surgery center, an outpatient imaging center, and programs in orthopedics, maternity care and neonatology. The hospital also provides an array of other specialty care and 24-hour emergency services as a Level 3 trauma center. Memorial Hermann also owns and operates the Memorial Hermann Wellness Center and University Place Retirement Community on the campus, but these are not included in the sale.

“The mission of Harris County Hospital District is to deliver high-quality healthcare to Harris County residents,” said Lopez. “Memorial Hermann Southwest has outstanding facilities, medical staff, employees, and services. It was readily apparent that if it were part of the Harris County Hospital District, we would be able to immediately meet the healthcare needs of many more Harris County residents while advancing our strategic expansion by offering our comprehensive programs and services at the Southwest Houston campus.”

“While it was not an easy decision to make, the proposed sale of our Southwest hospital to the Hospital District is the right thing to do for the community. It is in keeping with our mission to improve the health of the people in Southeast Texas and it will allow us to focus on

expanding our services to people in the communities we serve,” said Dan Wolterman, CEO, Memorial Hermann Healthcare System. “We believe that the Hospital District is better positioned to meet the growing needs of the Southwest Houston community.

“Memorial Hermann Southwest Hospital has a long and proud history of providing the very latest, high-quality care in southwest Houston,” Wolterman added. “I am confident this legacy will continue under the direction of the Harris County Hospital District.”

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