2/27/1996

PITTSBURGH, February 27, 1996 — The boards of directors of St. Margaret Memorial Hospital and the University of Pittsburgh Medical Center System (UPMCS) today announced their intention to merge the two organizations. This merger will combine the resources of two fiscally strong organizations, the region's only academic medical center and a community hospital with preeminence in primary care medicine.

As a result of this merger, St. Margaret will become part of the UPMCS. Three University of Pittsburgh Medical Center (UPMC) representatives will be appointed to the board of St. Margaret Health System, Inc., parent of St. Margaret. No funds will be exchanged in this transaction and no service or workforce reductions are planned. The organizations will operate as one economic unit and engage in joint strategic planning.

"This alliance was not about money or board seats, but rather the importance of building a strong community-focused and community-owned health care delivery system," stated The Rev. George L.W. Werner, member, St. Margaret Health System, Inc. Board of Directors. "It is based on trust and collaboration between the two organizations and will enhance our primary care mission," continued Rev. Werner.

"The citizens of Western Pennsylvania will be the ultimate benefactors of this alliance because it is a significant step in the establishment of what we believe will become this area's finest, most comprehensive health care system," added Martin G. McGuinn, member, UPMCS-Presbyterian University Hospital (PUH) Boards of Directors.

"Through this merger we will be positioned to provide a broader continuum of high quality, price-competitive health care services to our community and overcome the challenges posed by the changing environment," stated Stanley J. Kevish, president of St. Margaret. "It also secures our ability to build upon the strengths of our family practice residency program and the productive partnerships we have developed with our medical staff over the years," Mr. Kevish continued.

"We see this merger as the keystone in the development of an integrated, comprehensive health care delivery system involving partnerships with physicians, other community hospitals and insurers," stated Jeffrey Romoff, president of the UPMC. "The board and administration of SMMH should be applauded for their vision and initiative," Mr. Romoff concluded.

This merger formalizes a longstanding relationship between St. Margaret and the UPMC which has developed since the early seventies when St. Margaret's family practice residency was established. More recently, St. Margaret formally affiliated with UPMC in May 1994. Both organizations are part of Tri-State Health System which also includes Children's Hospital of Pittsburgh, Magee-Womens Hospital, Passavant Hospital, South Hills Health System and Washington Hospital.