PITTSBURGH, April 5, 2001 — The Board of Trustees of Children’s Hospital said today that it approved a term sheet outlining the terms of a possible merger with University of Pittsburgh Medical Center and the entry into negotiations for a definitive merger agreement. If consummated, the merger would unite two of the most well-known and respected health care organizations in western Pennsylvania.
The $700 million transaction would be one of the largest hospital mergers in Pittsburgh history. Under the proposed terms, UPMC would assume all of Children’s Hospital’s liabilities and build Children’s a new $250 million hospital on the site of the UPMC Montefiore campus. It also would invest $250 million to expand Children’s clinical and research programs over the next 10 years.
In addition, Children’s Hospital’s $200 million endowment would be moved to the newly formed Children’s Hospital of Pittsburgh Foundation and would remain separate from the UPMC transaction. The purpose of the foundation will remain the same – to raise funds in support of Children’s clinical and research programs.
Ronald L. Violi, president and chief executive officer of Children’s Hospital, said the proposed transaction provides the three requirements necessary for Children’s board’s acceptance: a new hospital; enhancement of Children’s mission of patient care, teaching and research; and the ability to ensure open access to pediatric care for all children in western Pennsylvania, regardless of insurance affiliation or ability to pay.
“Over the past century, Children’s Hospital has built a national reputation for providing the children of our region with the best pediatric care available. This agreement with our longtime colleagues at UPMC will permit us to continue serving all children, without regard to insurance affiliation. It also provides a solution to our outdated 235-bed facility in Oakland by providing a new state-of-the-art hospital and significant additional resources for research and clinical programs. In addition, the agreement will allow Children’s Hospital to serve as the center of pediatric care, teaching and research for the entire University of Pittsburgh Medical Center.”
“This historic partnership is a winning combination for both parties,” said Jeffrey Romoff, president and chief executive officer of University of Pittsburgh Medical Center. “The addition of Children’s Hospital to the University of Pittsburgh Medical Center will mean that its excellent clinical programs will be expanded not only in Oakland but also throughout the system and that research efforts aimed at developing better treatments for the diseases and injuries children suffer will be enhanced.”
According to the proposed terms, UPMC would build a new campus for Children’s Hospital that includes a 320,000-square-foot inpatient tower of 235 beds, an ambulatory care facility and an administrative office building for hospital staff and physicians. The campus would be composed of new construction and renovation of existing buildings. The project has been fast-tracked and the new hospital is scheduled to be finished by 2005. At such time, Children’s current inpatient tower would be occupied by UPMC.
“It is hoped that this investment in the community will not only enable Children’s to maintain its current level of excellence but also eventually make it the leading pediatric center in the United States,’’ Romoff said.
Under the proposed transaction, Children’s name would remain as Children’s Hospital of Pittsburgh, but the phrase “of the University of Pittsburgh Medical Center,” would be added to it.
It is anticipated that no clinical positions would be eliminated as a result of the proposed agreement.
Children’s Hospital of Pittsburgh is the only hospital in western Pennsylvania dedicated solely to the care of infants, children and young adults. The hospital consistently ranks as one of the 10 best children’s hospitals in the nation by U.S. News and World Report. Last year, it ranked eighth in funding provided by the National Institutes of Health. Children’s has 2,200 employees and 740 active staff physicians.
University of Pittsburgh Medical Center is the leading integrated health care delivery system in western Pennsylvania. It meets comprehensive health care needs through UPMC hospitals -- the region's largest and finest network of tertiary, specialty, and community hospitals -- and by offering a variety of health-related services and products. With more than 25,000 employees, University of Pittsburgh Medical Center is the largest nongovernmental employer in the region. In addition, it is one of the largest not-for-profit integrated health care systems in the United States.
UPMC’s hospitals and affiliated hospitals include UPMC Presbyterian (including UPMC Montefiore and Eye and Ear), UPMC Shadyside, UPMC Bedford Memorial, UPMC Braddock, UPMC Horizon (Greenville and Shenango Valley), UPMC Lee Regional, UPMC McKeesport, UPMC Passavant, UPMC St. Margaret, UPMC South Side, UPMC Rehabilitation Hospital, Western Psychiatric Institute and Clinic, Magee-Womens Hospital, Children’s Hospital of Pittsburgh (through Tri-State Health System), South Hills Health System (through Tri-State Health System), the Washington Hospital (through Tri-State Health System), Brownsville General Hospital, Ellwood City Hospital, Fay-West Health System (Frick and Highlands hospitals), Jeannette District Memorial Hospital, Meadville Medical Center, Northwest Medical Center and United Community Hospital.