St. Vincent's and Mayo Clinic Schedule Closing: Long-Delayed Hospital Projects Will Proceed

Wednesday, March 09, 2005

JACKSONVILLE, Fla., March 9, 2005 — St. Vincent's and Mayo Clinic announced they are moving ahead to finalize the sale of St. Luke's to St. Vincent's and begin construction of Mayo Clinic's new hospital. At a closing set for early July, St. Vincent's will take legal title to St. Luke's and will lease the hospital back to Mayo Clinic for use while Mayo's new facility is built. In announcing the long-awaited transaction, hospital leaders acknowledged causes of delays to the major healthcare projects.

"We first announced these plans back in 2001. At that time, we fully expected to be operating St. Luke's this year," said John Maher, St. Vincent's President and Chief Executive Officer. "Likewise, Mayo Clinic expected its new hospital to be finished this year. Because of unfortunate, numerous and costly legal challenges by Hospital Corporation of America (HCA) to these projects, the expansion of medical care in a growing Jacksonville area has been delayed by three years. We're pleased to be moving forward, at long last."

With the decision, Mayo and St. Vincent's will now complete the purchase agreement for St. Luke's Hospital and are expected to finalize the sale in early July. At that closing, Mayo Clinic will transfer ownership of St. Luke's, physician office buildings and other tangible assets to St. Vincent's. Mayo has already begun preliminary construction for its new facility, a project that will take about three years. During that time Mayo will continue to operate St. Luke's under a lease agreement with St. Vincent's. When Mayo moves into its new hospital in 2008, there will be a final closing, and St. Vincent's will operate St. Luke's.

"We're delighted to proceed in earnest on the long-envisioned Mayo Clinic Hospital at our San Pablo Road campus," said George B. Bartley, M.D., Chair of Mayo's Board of Governors. "When Mayo Clinic Hospital opens in 2008, patients coming to Mayo for complex medical care will be treated at a single location with integrated inpatient and outpatient services. Having our hospital, clinic, laboratory, research and education facilities on one campus improves patient care and efficiency and helps reduce costs."

Bob Walters, Chief Administrator of Mayo Clinic in Jacksonville, says Mayo is eager to proceed. Engineering and design documents for the 214-bed teaching and research hospital are complete. Mayo Clinic's development campaign exceeded its target of raising $70 million to help fund the construction of Mayo Clinic Hospital, which will be built above and behind the Mayo Building at the clinic's San Pablo Road campus.

The Agency for Healthcare Administration (AHCA) originally approved three certificates of need (CON) requested by St. Vincent's and Mayo: a CON for St. Vincent's to purchase St. Luke's Hospital and use the facilities as a new 145-bed hospital; a CON for Mayo Clinic to build a new 214-bed hospital; and a third and separate CON for St. Vincent's to operate the 10-bed Level II neonatal intensive care unit currently at St. Luke's.

The Certificate of Need program is a regulatory process that requires certain healthcare providers to obtain state approval before offering new or expanded services or making major capital expenditures. The CON process is intended to help ensure that major expenditures and new services proposed by healthcare providers are needed for quality patient care within a particular region or community. The program prevents unnecessary duplication of services by selecting the best proposal among competing applicants who wish to provide a particular health service. CON review covers not only new facility construction but also initiation of specialized hospital services, bed conversions, increases in the number of inpatient beds at hospitals and nursing homes, transfers of CONs, and a variety of other projects which could significantly affect services or costs.

When HCA challenged the CON approvals, the projects were delayed. The delays grew longer as administrative law judges affirmed the original AHCA approvals, only to be followed by more appeals by HCA. HCA is the health system that owns Memorial Hospital, the Jacksonville medical center geographically closest to St. Luke's. Legal filings by HCA challenged the patient need for the new projects.

"AHCA's orders and rulings by the court have validated our understanding of the need for medical care around St. Luke's, which will only grow more acute as the community continues to grow and age," said Maher. "We have a tradition of providing healthcare at a quality level that earns the highest kind of recognition, and we want to bring that level of care to Jacksonville's southside."

St. Vincent's earned a Distinguished Hospital Award from J.D. Power and Associates in 2005 and was previously recognized by U.S. News & World Report with the highest-ranked heart hospital in the state and one of the top 50 heart hospitals in the nation.

"We look forward to working with doctors and caregivers at St. Luke's, the facility that has been here in Jacksonville longer than any other private hospital," Maher said. "St. Vincent's and St. Luke's have been taking care of patients in Jacksonville for a combined 221 years. Together, we have quality, tradition and history. We're excited these long-awaited and much-needed projects are moving forward."

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St. Vincent's Health System includes St. Vincent's Medical Center, St. Catherine Labouré Manor, Consolidated Laboratories, Mobile Mammography, St. Vincent's Foundation, Advanced Patient Transportation, Seton Pharmacies, Consolidated Pharmacies, and other outpatient healthcare services. St. Vincent's was founded by the Daughters of Charity in 1916 to provide health services to the sick and the poor of North Florida. Today, St. Vincent's serves more than 25,000 inpatients each year, about 50,000 patients for outpatient surgery and invasive procedures and more than 60,000 people in its Emergency Room. St. Vincent's Medical Center was recognized by J.D. Power and Associates as a Distinguished Hospital in 2004 for providing "An Outstanding Patient Experience" and was named one of "America's Best Hospitals" in the category of Heart and Heart Surgery by U.S. News & World Report in 2003. St. Vincent's is a member of Ascension Health, the nation's largest Catholic and nonprofit health system with more than 100,000 associates serving in 67 acute care hospitals and dozens of related facilities in 20 states and the District of Columbia. Consistent with its mission to serve all people with special attention to those who are poor and vulnerable, Ascension Health provides clinically excellent care with an emphasis on innovation and a focus on transforming the healthcare industry.

Mayo Clinic is a multispecialty medical clinic in Jacksonville, Fla. The staff includes 316 physicians working in more than 40 specialties to provide diagnosis, treatment and surgery. Patients who need hospitalization are admitted to nearby St. Luke's Hospital, a 289-bed Mayo facility. Mayo Clinics also are located in Rochester, Minn., and Scottsdale, Ariz. Visit www.MayoClinic.org/news for all the news from Mayo Clinic.

Media Contacts:
Pamela Rittenhouse
St. Vincent's
(904) 308-7967
pritt002@jaxhealth.com

Erik Kaldor
Mayo Clinic
(904) 953-2299
kaldor.erik@mayo.edu

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