After months of confidential negotiations, Tallahassee Memorial HealthCare and Florida State University have struck a deal: Pending city commission approval, TMH would become a part of FSU Health with the university taking control of all the city-owned assets of the hospital.
The “landmark agreement,” first announced in a Sept. 16 informational email to TMH staff that was obtained by the Tallahassee Democrat, could mean the end of community ownership of the hospital in favor of an academic medical center – a step toward developing a clinical enterprise like the sprawling healthcare system its rival University of Florida has been operating for decades.
“Maintaining local control and governance of our hospital was one of our most important tenets, and we believe this partnership accomplishes that goal and will position our organization — and our community — for an even stronger future,” CEO Mark O’Bryant wrote in the letter.
A press release and joint statement issued later by FSU President Richard McCullough and O’Bryant stressed that “for both institutions, maintaining the hospital as a locally based, locally governed health care system remained paramount.”
“By uniting TMH’s longstanding commitment to community care with FSU’s mission of academic excellence and service, we are boldly forging a new vision for the long-term future of health care in the North Florida region and beyond,” McCullough wrote in a letter to the campus community. “Together, we are positioning our region to become a beacon of innovative medicine — one where world-class care is delivered hand-in-hand with transformative education and pioneering research.”
The hospital promised employees that day-to-day operations will continue unchanged, the hospital’s finances remain separate from the university and employees will remain fully employed. At the same time, the letter said that “over time, TMH will transition its brand (name) and brand colors to FSU Health to reflect the academic health center partnership.”
While the hospital and university pledged to work with the city to transfer the assets to FSU, any deal would have to be approved by the City Commission. The process for how that could happen is far from certain and has already become a community flashpoint marked by accusations that FSU and the city staged a “hostile takeover” of the hospital behind closed doors.
What’s in the deal between TMH and Florida State University?
City leaders haven’t been at the table during the merger discussions, but those close to the discussions pointed to some key points of the deal.
TMH is currently owned by the City of Tallahassee but operated by TMH’s nonprofit that’s led by a 17-person board. Under the new agreement, those close to the negotiations say, roughly half of the board will be made up of FSU representatives. The two parties agreed on a 9-8 split, with TMH having one extra board member.
The deal, according to sources, also ensures politically appointed FSU Board of Trustees members will not be on the board at least early on in the new relationship.
“This partnership positions TMH as an academic healthcare system,” a FAQ to hospital employees reads. “By aligning more closely with FSU, we expand opportunities for education, training, funding and research — benefiting patients, providers, and our community.”
It was also agreed that TMH would have right of first refusal if FSU ever wanted to sell or transfer the assets.
In a note to hospital employees, TMH administrators said the agreement would not lead to downsizing or impact existing positions or compensation at the hospital.
“For patients, the arrangement means expanded long-term access to specialized care and treatments that previously may have required travel to larger hospitals hours away,” according to the press release. “Patients will continue to see their current doctors, with new specialists and services added over time.”
Officials added that “FSU Health will maintain TMH’s existing charity care policy for uninsured and underinsured patients.”
What’s next? There’s not ‘a prescribed process’ for the way forward
The hospital is not operated by the city, but all of the assets associated with TMH’s main campus — including the 75-acre property, two-million square-foot building, hospital beds, X-ray machines and more — are still owned by the city as part of a $1-a-year lease agreement.
The lease agreement’s origins stretch back to the hospital’s founding on April 23, 1948, when six people “gathered in a small room in a wooden barracks at Dale Mabry Field, on the outskirts of Tallahassee” and created the hospital. Back then, it was called “Baptist Hospital” and made up of 36 one-story wooden barracks scattered on a hill at Dale Mabry Field, where Tallahassee State College now sits off Appleyard Drive.
The city of Tallahassee purchased the hospital for $10,000. The original location, however, wasn’t ideal. For roughly $2 million, a new 150-bed hospital building was built at TMH’s main campus location on Miccosukee Road. In 1979, the city set up the lease deal in which the city retained ownership of the property and the building, but the TMH nonprofit operates the enterprise.
Under any proposed restructuring involving FSU, “all of that changes and puts in motion decision making by the city commission,” City Manager Reese Goad told the Democrat. Goad also said there is “not a prescribed process” going forward.
“If they came to an agreement on how they would form their relationship in the future, I would expect that to involve the city being the title holder to majority of assets,” Goad said. “They would send the arrangements to the city, and we would check in with city commission for direction and process.”
Some commissioners have called for public meetings to discuss that decision, but Goad said he’s “confident that’s not a requisite process.” He said ultimately the city commission would weigh in and determine the path, adding the public would also be able to speak in whatever format the matter came before commissioners.
Controversy and what the deal means for Tallahassee health care
The deal is the culmination of a long and somewhat tortured journey as the two entities have been working to create an academic health center model for years.
Four years ago, TMH and FSU even hired an outside consultant group to develop a “joint strategic plan” that would help them create this. And even then, problems were identified immediately with the consulting group finding “mission misalignment” and “physician resistance.”
Discussions of FSU ownership first burst into the headlines in March when the Tallahassee Democrat reported on a bombshell agenda item that said the city was exploring the possibility of a sale. This was prompted by a request from the hospital — that has since been retracted — to change its bylaws to accommodate out-of-county growth.
The idea of a sale received immediate backlash, with many hospital leaders and community members begging the city to leave TMH’s fate in the hands of TMH. Many attended the March City Commission meeting to share how a community led hospital ensures community needs are met.
Hospital supporters accused FSU and the mayor and city manager of having “secret meetings” to facilitate a “hostile takeover” of the hospital. Critics say FSU taking ownership of the hospital effectively puts it under state control with political appointees to FSU’s board deciding strategy.
Some TMH doctors have said a shift to an academic medical center would spark an exodus of doctors who’d rather treat patients than teach. But FSU President Richard McCullough said in a column published in the Tallahassee Democrat that “doctors who want to continue to focus 100% on direct patient care would do so, with no changes.”
McCullough also pointed out that the community would have access to “expanded top-tier medical care” through access to cutting-edge treatments stemming from research and doctors who perform more specialized care. A ubiquitous complaint among patients is the need to travel outside of Tallahassee to seek treatment from specialists.
Read the full letter to TMH staff here.
Read the full letter to the FSU campus community.
The hospital’s letter to staff addressed that point noting that the community can “look forward to expanded access to new specialists, services and treatments in the future.”
“All of TMH’s strengths – that have helped us recruit doctors, nurses and staff who value the community hospital dynamic – will either be retained or enhanced by this agreement,” the letter to staff reads. “We have always kept at the forefront of our negotiations our incredible team and the health care of our residents.”
The deal between FSU and TMH isn’t the first as the two have already forged partnerships to create a FSU Health center on TMH’s campus in Tallahassee and a new acute care hospital under the FSU Health name in Panama City Beach.
TMH has already invested between $30 million and $50 million in the TMH and FSU hospital partnership in Panama City Beach, Goad has said. Under a yet-to-be finalized agreement between the two entities, FSU would repay TMH for the hospital construction costs and it would be operated by TMH. That reportedly put pressure on hospital negotiators to close a deal.
“This is an important time in the history of TMH – this agreement strengthens our role as a healthcare leader and as a partner in an academic healthcare system,” O’Bryant wrote in the letter to hospital staff. “It will transform research and education in our region – all while ensuring TMH remains the independent, mission-driven organization of which you are proud to be a part.”
Joint Statement from FSU and TMH
FSU President Richard McCullough and TMH CEO Mark O’Bryant put out this joint statement on the FSU and TMH academic health center partnership.
“We are pleased to announce that Florida State University and Tallahassee Memorial HealthCare have reached a landmark agreement to advance our shared vision of creating a world-class academic health center in Tallahassee. We look forward to presenting our plan to the Mayor, City Commissioners and City Manager.”
“By uniting TMH’s longstanding commitment to community care with FSU’s mission of academic excellence and service, we are seizing an extraordinary opportunity to shape the long-term future of health care in North Florida and beyond. This partnership will elevate the quality of health care for our community, create dynamic educationalpathways for students, and foster groundbreaking research under the name FSU Health. It will provide the opportunity to establish the hospital as a true quaternary center—expanding services, extending its reach, generating jobs, and fueling regional growth, all while preserving it as a community-focused hospital.”
“We are grateful for the trust and collaboration that have brought us to this pivotal moment. Together, FSU and TMH will form an academic health center that serves as a beacon of excellence and hope — empowering the next generation of health care professionals, driving innovation, and enhancing the well -being of all those we serve. We look forward to sharing more details with the community in the days ahead.”
Local government watchdog reporter Elena Barrera can be reached at ebarrera@tallahassee.com. Follow her on X: @elenabarreraaa.
This article originally appeared on Tallahassee Democrat: FSU, TMH deal announced: Future of Tallahassee hospital now in city commissioners’ hands
Reporting by Elena Barrera, Tallahassee Democrat / Tallahassee Democrat
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