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Shadyside Hospital Selects UPMC

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PITTSBURGH, June 6, 1996 — The boards of Shadyside Hospital and the University of Pittsburgh Medical Center (UPMC) today announced their intention to enter into merger discussions.

"After rigorous evaluation of various merger and affiliation strategies, the decision to further pursue a merger with UPMC is both an appropriate and visionary response to the demands of the changing market forces in the health care industry," stated G. Nicholas Beckwith III, chairman, Shadyside Hospital Board of Trustees.

"Through this relationship, Shadyside Hospital would become part of the University of Pittsburgh Medical Center System (UPMCS). Our high quality medical staff and patient care services would be joined with those of UPMC and enhanced by its academic leadership as one of this country's top ten medical centers," he added.

A key element in the merger would be the eventual conversion of Montefiore University Hospital from an acute care facility to another type of health care facility within the UPMCS network. Although plans for the conversion at Montefiore have not been finalized, sub-acute care, skilled nursing beds, a same day surgery center, ambulatory programs and cancer services are among future alternatives that will be evaluated. When this conversion occurs, those acute care patients who were formerly admitted to Montefiore will go to Shadyside Hospital, Presbyterian University Hospital or other UPMC affiliates.

Henry A. Mordoh, president, Shadyside Hospital said, "We have carefully studied all of the options. The UPMC was chosen as our partner because of shared vision and philosophy. This decision was made with the belief that both organizations are strongly committed to promoting the delivery of quality clinical care, including uncompensated care, as well as in promoting community interests. This partnership will give us the opportunity to combine our efforts in contributing to the rationalization of health care, including reductions in cost and in duplicative capacity." He added that "the unique partnerships that Shadyside Hospital and the UPMC enjoy with Blue Cross further enhance the strength of the Shadyside/UPMC relationship."

Presbyterian University Hospital and Shadyside Hospital would be governed by a joint board. Representation on the board would be equally divided among Shadyside Hospital, Presbyterian University Hospital and the University of Pittsburgh.

As it is planned, no funds would be exchanged in this transaction and the organizations would operated as one economic unit, with an integrated management system. It is anticipated that health care costs could be reduced by $75 to $100 million through consolidation and purchasing discounts. During the past six months, Shadyside Hospital has had discussions with Allegheny General Hospital, The Western Pennsylvania Hospital, the Cleveland Clinic, Columbia-HCA (a for-profit group headquartered in Nashville, Tennessee), as well as the UPMC.

"Shadyside Hospital has had a long history of providing outstanding clinical care to this community. We are pleased that its board of directors has chosen to partner with the UPMC," said George Taber, chairman of the board, UPMCS.

"This would be an important step in the development of the UPMC's integrated health care delivery system. Not only would it combine the assets of two strong organizations, it would also give us the flexibility to deliver acute care through two, rather than three, Pittsburgh hospitals. Montefiore's resources, therefore, could be converted to less costly programs and services. This type of redirection and cost-effective planning is only possible within a large, economically-joined system," concluded Jeffrey Romoff, president of the UPMC.