Originally created 07/09/98

New management gets final approval

ATLANTA -- The University System Board of Regents gave final approval Wednesday to a "memorandum of understanding" that will allow nonprofit MCG Health Inc., to manage Medical College of Georgia's Hospital and Clinics.

The deal will not change the medical college's relationship with the university system, and the regents will retain a major voting bloc on the MCG Health Inc. board.

The regents created the non-profit corporation about 1 1/2 years ago to give the school more flexibility to compete with other area hospitals and clinics.

MCG Health's Board of Directors will be reconstituted to include members of the Board of Regents, public representatives with health care and business experience, University System of Georgia Chancellor Stephen Portch or his delegate, Medical College of Georgia President Francis Tedesco, the dean of MCG's School of Medicine, and the president of the MCG Physicians' Practice Group.

The new board will then hire a chief operating officer to run the hospital and clinics.

Currently, the school runs those facilities.

Ultimately, MCG Health Inc. will be able to enter into joint ventures, form partnerships with other organizations, enter into long-term contracts and borrow money to finance improvements.

A report earlier this year from Arthur Andersen & Co. concluded that the "ability of the hospital component to continue supporting the academic and teaching mission of the university has become more challenging."

Arthur Andersen officials said other university hospitals it studied that have some degree of autonomy from the state are more financially viable.

Arthur Andersen said the length of time patients stay at University of North Carolina's hospital is shorter than at MCG.

The analysis also raised questions about the number of employees at MCG facilities and the lack of incentive to turn a profit because money must be returned to the state treasury, rather than go toward improvements at the hospital.


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