Florida State University and Tallahassee Memorial HealthCare have finalized the agreements governing their new academic health system, completing another major step in a transformation that began with the controversial transfer of Tallahassee’s city-owned hospital property and assets to FSU earlier this year.
FSU and TMH announced Wednesday that they have completed lease and operating agreements and an academic and clinical framework covering Tallahassee Memorial Hospital and the future FSU Health hospital in Panama City Beach. The agreements establish the long-term governance, operational and academic structure for FSU Health.
The agreements follow the Tallahassee City Commission’s March approval of the transfer of city-owned hospital assets to FSU. The transfer was approved on a divided vote after months of debate over the future of the community hospital and concerns about local control. The legal transfer was completed in April.
The financial commitments associated with the transaction are significant. Under the original agreement, FSU agreed to provide $109 million over 30 years in recognition of the public’s investment in the hospital and committed another $250 million through 2034 for hospital improvements, clinical faculty, research and other investments.
The broader transfer agreement calls for approximately $1.7 billion in FSU investment locally over 30 years. A city economic analysis projected the arrangement could generate more than $3.64 billion in economic impact and more than 900 jobs during that period.
Despite FSU’s ownership of the hospital property, TMH will continue running the hospital. Under the newly completed agreements, TMH remains responsible for day-to-day operations at Tallahassee Memorial Hospital, the planned Panama City Beach hospital, other TMH clinical locations and TMH Physician Partners. TMH employees remain TMH employees, and patients can continue seeing their existing physicians and medical teams.
“Today marks a defining step forward in our shared vision to build an academic health system that will serve our community and our state for generations to come,” FSU President Richard McCullough said.
TMH CEO Mark O’Bryant said the partnership creates opportunities to expand medical services, research and education while maintaining TMH’s commitment to community-based care.
The new agreements also address one of the issues raised during the city’s consideration of the hospital transfer — the future governance and public-service mission of TMH.
TMH’s existing charity-care policy will remain in place, while the new governance structure gives FSU the ability to nominate candidates for boards overseeing operations in Tallahassee and Panama City Beach. Deed restrictions associated with the transfer also require the Tallahassee property to continue operating as a hospital and protect charity and indigent-care commitments.
The partnership is designed to transform TMH from a community hospital system into the clinical anchor of an academic health system combining patient care with FSU’s medical education and research programs.
Plans include additional graduate medical education programs in specialties such as trauma surgery, pulmonary and critical care medicine, and minimally invasive and bariatric surgery.
FSU also plans to open its new 140,000-square-foot Health Research and Collaboration Building on the TMH campus this fall. The facility is expected to house clinical research, laboratories and dozens of health researchers.
With the latest agreements finalized, the focus now shifts from negotiating the structure of FSU Health to implementing a partnership that university, hospital and city officials have described as a multibillion-dollar transformation of healthcare in Tallahassee and North Florida.
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