Nebraska Medicine’s board is railing against a to-be-confirmed proposal that would see the two-hospital academic network come under full ownership of the University of Nebraska system.
Since 1997, Nebraska Medicine has operated as an independent nonprofit with 50-50 ownership held by Clarkson Regional Health Services and the public university. The latter runs the University of Nebraska Medical Center (UNMC), which is a research and teaching affiliate of Nebraska Medicine.
Jan. 2, the university and Clarkson announced a strategic transaction that would see Clarkson resign its 50% membership in Nebraska Medicine in exchange for a $500 million payment from the University of Nebraska. The deal would also see the university pay another $300 million or so for land and buildings owned by Clarkson, while Clarkson donates $200 million to the university “to support Project Health, the ongoing facility replacement project on the Omaha Campus,” according to an announcement.
The pair said the deal, which will be voted on by the university’s board of regents on Jan. 9, is “the logical next step” considering the tightening integration between Nebraska Medicine and UNMC that will continue with Project Health.
It will also optimize workforce development, recruitment and retention; better align strategic priorities between the organizations and for dually employed faculty; strengthen the University of Nebraska’s brand; more efficiently deploy philanthropic resources; and expand Nebraska Medicine’s debt capacity by realigning its organizational structure to be more familiar for credit markets and rating agencies.
“The Board of Regents has an important responsibility to do everything possible to help strengthen our university system and deliver benefits to the residents of Nebraska,” Board of Regents Chairman Paul Kenney said in the announcement. “The structure that is being proposed has been proven to help deliver better healthcare for citizens where it has been put into action,” he said referencing other peer academic institutions like Michigan State University, The University of Washington and the University of Texas.
However, Nebraska Medicine’s independent board disagreed with the plans. In a statement also released Jan. 2, it painted the deal as a “state takeover of Nebraska Medicine,” a “misallocation” of public funds and an “inappropriate expansion” of the university’s control that could place new burdens on the state.
“The current structure is effective and protects taxpayers from government overreach,” Nebraska Medicine wrote on a “Protect Nebraska Health Care” website it subsequently launched in protest of the deal.
Nebraska Medicine has also raised concerns that handing over full control would give the University of Nebraska “the power to redirect Nebraska Medicine’s funds to cover the University’s budget gaps including for non-healthcare purposes.” The university is facing a projected budget shortfall of $471 million in 2026, Nebraska Medicine noted.
“The University is in a budget crisis, and the Regents are now voluntarily proposing to spend nearly a billion dollars in taxpayer money at a time when they are actively making cuts across their campuses,” Mogens Bay, vice chair of Nebraska Medicine’s board, said in a statement from the system.
Such intrusion on Nebraska Medicine’s funds could delay or limit its ability to invest in new care technologies or aggressively recruit clinicians, the organization said, in contrast to the university and Clarkson’s claims of improved staffing.
“Our focus on our mission has never been stronger,” Lance Fritz, chair of Nebraska Medicine’s board, said in a statement. “Our current governance is working well and the Board of Regents’ proposed takeover poses significant threats to the future of healthcare in Nebraska."
The university and Clarkson, in their announcements, said they expect no day-to-day operations, services or staffing changes stemming from the potential transaction, and affirmed Nebraska Medicine would retain its status as a nonprofit.
Nebraska Gov. Jim Pillen, in the university’s announcement, also shared his strong support for the deal, “because it will directly benefit the citizens of our great state by bringing them better healthcare and by further strengthening the University of Nebraska system.”
Nebraska Medicine’s Fritz said the system is “pursuing all actions necessary” to prevent the deal.
The board noted that it has so far been left out of the negotiations, “contrary to the joint operating agreement between the Members and Nebraska Medicine. Nebraska Medicine’s governing documents explicitly require approval of the Nebraska Medicine Board before these types of changes to ensure predictability, continuity, and strong independent governance.”
“We remain fully committed to our mission and believe there is an opportunity to work with the Board of Regents and Clarkson to move forward more productively and continue Nebraska Medicine’s bright future as an independent health system,” Fritz said.