| December 30, 2010- Detroit, MI and Nashville, TN – Vanguard Health Systems, Inc.(Vanguard) and the Detroit Medical Center (DMC) are signing final documents today and expect to complete the sale of the DMC to Vanguard Friday December 31, 2010, effective January 1, 2011. The announcement is the culmination of a process that began with the previous announcement of a letter of intent in March of this year.
Under terms of the final purchase agreement, Vanguard will acquire substantially all of the assets of the Detroit Medical Center for approximately $365 million in cash based on a formula set out in the agreements defining the assets and liabilities of the DMC. In addition, Vanguard will assume all of DMC’s liabilities other than outstanding bonds and similar debt that will be paid or defeased upon closing of the transaction and certain other immaterial liabilities.
Vanguard has agreed to keep all of DMC’s hospitals open for at least ten years, to invest an estimated $350 million for routine capital improvement and an additional $500 million on specific capital projects during the first five years of ownership. Vanguard has also agreed to assume the liability for the defined-benefit pension plan for DMC retirees and to keep in place a policy for charity, indigent and uncompensated care that is at least equivalent to the DMC’s current policy.
“We are thrilled to have the Detroit Medical Center join Vanguard Health Systems,” said Keith Pitts, Vice Chairman of Vanguard. “The Detroit Medical Center and its staff and leadership have proven to be smart, resourceful and committed to this community. We look forward to supporting this team and their great traditions in the future.”
“We’re excited to proceed and build upon the momentum that began when we broke ground last month for the new 105,550 square-foot Children’s Hospital of Michigan Specialty Center. This was the first of a total of 15 construction projects that this transition will bring. Now, DMC will be able to match the world-class, quality care our patients already receive, with world-class facilities,” said Steve D’Arcy, Chairman, DMC Board of Trustees.
The transaction has received all necessary city, county, state and federal reviews and no further approvals are required. The state, city and county development authorities have approved necessary tax abatements within the enterprise zone. The Attorney General of Michigan has approved the transaction under his responsibility to oversee the sale of any not-for-profit organization. Vanguard intends to assume DMC’s existing provider agreements with government and private payers.
“The Detroit Medical Center is world-renown and a leader in so many facets of medicine. We hope to use the expertise of the team here to help us strengthen our own offerings and capabilities – in pediatrics, in trauma, in cancer and in rehabilitation across the whole family of Vanguard hospitals,” said Charles N. Martin, Jr., Chairman and CEO of Vanguard.
“There was tremendous effort to bring this deal to a close and it will be exciting to see all the construction projects in the City of Detroit,” said John Levy, Vice Chairman, DMC Board of Trustees.
“This is great for our City,” added Michael Duggan, President and CEO, Detroit Medical Center.
The Detroit Medical Center operates 10 hospitals and institutes, including Children’s Hospital of Michigan, Detroit Receiving Hospital, Harper University Hospital, Huron Valley-Sinai Hospital, Hutzel Women’s Hospital, Kresge Eye Institute, Rehabilitation Institute of Michigan, Sinai-Grace Hospital, DMC Surgery Hospital, and DMC Cardiovascular Institute. The Detroit Medical Center is a leading regional healthcare system with a mission of excellence in clinical care, research and medical education.
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