UAB, Children's Hospital to Explore Affiliation

Building on 30 years of collaboration between the UAB and Children’s Health Systems, the University of Alabama Board of Trustees today voted to explore establishing a joint operating agreement between the two health entities to coordinate the children’s and women’s health care they provide. Children’s Hospital Board of Trustees previously approved the concept.

November 17, 2000

BIRMINGHAM, AL — Building on 30 years of collaboration between the UAB and Children’s Health Systems, the University of Alabama Board of Trustees today voted to explore establishing a joint operating agreement between the two health entities to coordinate the children’s and women’s health care they provide. Children’s Hospital Board of Trustees previously approved the concept.

“Children’s and UAB are widely recognized for providing the highest quality care,” said Dr. Jim Dearth, CEO of Children’s Health System. “Today’s action enables our organizations to work toward a synergy that will further enhance health care for the women and children of Alabama and beyond.

“Additionally, such an alliance would enhance the already outstanding contribution UAB pediatric specialists make toward pediatric research, as well as continue the tradition of excellence in both undergraduate and graduate medical education.”

Since 1968, the University of Alabama School of Medicine and Children’s Hospital have had an affiliation agreement establishing Children’s Hospital as the primary site for pediatric education at UAB. Since 1991, UAB Department of Pediatrics offices have been located in the Ambulatory Care Center of Children’s Hospital, and in 1997, UAB and Children’s worked together to create a dedicated pediatric stem cell transplant unit, which opened earlier this year. The officials of both health systems began exploratory discussions in October 1999 to find a means to more closely align their patient care, education and research programs.

“Everyone is concerned about the rising cost of health care,” said UAB Health System CEO David Fine. “This is a very positive step toward raising health care standards for mothers and their children, while providing those services as economically as possible.”

“Children’s Hospital is in the upper quartile of children’s hospitals in the nation and UAB’s pediatrics department is seventh in the nation in research funding from the National Institutes of Health. Tightening the relationship between the two organizations allows for the creation of a very strong advocacy program for children’s and women’s health that would serve as a magnet in the Southeast for research into children’s health issues,” said UAB President Ann Reynolds.

The UA System Board of Trustees’ action clears the way for Children’s and UAB to begin formal negotiations on an affiliation agreement that must be submitted to the UAB and Children’s Health System Boards and the University’s Board of Trustees for consideration and approval. The University trustees endorsed in concept terms that include the following:

  • The two hospitals’ revenues and expenses associated with services provided to patients under age 18 and uniquely to women (obstetrics/gynecology including gynecological oncology) would be managed by a nonprofit 501(c)(3) corporation.

  • This organization would be formed by a joint operating agreement that has a five-year initial term, renewable by mutual agreement for successive five-year terms.

  • The organization’s board would have 16 voting members, eight to be appointed by Children’s Board of Trustees, and eight to be appointed by the University’s Board of Trustees.

  • The CEO would be appointed by the new board; it has been agreed that Dr. Dearth would serve in this capacity.

  • Each party would retain ownership of its facilities. The two entities would not merge assets, nor would employment status change for employees as a result of the agreement. Children’s Hospital would continue to have an open medical staff.

  • The members would share income from the joint operations on an equal basis.

  • Unified management would enable cost-effective purchasing of goods and services such as hospital supplies and insurance and facilitate joint faculty recruitment.

  • The legal name of the new venture would be CWH, an alliance of Children’s Health System and UAB Health System.

  • A number of reserved powers remain with the Children’s and UA boards related to capital expenditures, debt and amendment of the joint operating agreement.