HOUSTON (September 17, 2009)

The Harris County Hospital District Board of Managers announced today that it is terminating the proposed agreement to acquire Memorial Hermann Southwest Hospital effective immediately. The deal had been targeted to close on Nov. 30.

The Hospital District approached Memorial Hermann in late June and proposed the acquisition of Memorial Hermann Southwest Hospital. The Hospital District's initial proposal resulted in the two entities announcing last month the proposed sale of Memorial Hermann Southwest Hospital to the Hospital District. In making this announcement, the respective health systems expressed a shared vision to improve access to critically needed specialty medicine services and hospital beds for the undeserved residents of southwest Houston. The Hospital District also outlined its vision to operate the facility as a full-service community hospital that would serve not only the uninsured, but Medicare, Medicaid and privately insured patients.

Late last week, Memorial Hermann sent a letter to the Hospital District that was intended to gain formal agreement to a number of critical actions to address longstanding, unresolved issues. The issues centered on the need for meaningful progress to be made in certain critical areas - notably medical staff relations and managed care contracting - so that the Hospital District could operate Southwest as a full-service community hospital if the transaction were to be approved.

"We are deeply disappointed that the Hospital District chose to terminate the proposed transaction instead of addressing the issues raised in our letter. This was an innovative solution to a longstanding community problem that would have expanded access to specialty medical care and inpatient beds for thousands of uninsured and underinsured southwest Houston residents," said Gerald Bennett, board chair, Memorial Hermann Healthcare System.

"We still believe the southwest Houston community requires additional healthcare resources to meet the needs of growing numbers of under- and uninsured in the area," said Dan Wolterman, CEO, Memorial Hermann. "It is critically important to keep Memorial Hermann Southwest strong, since it is the only hospital still serving southwest Houston. To that end, we will turn our full attention to working with the hospital medical staff and the community to create a plan that will allow us to continue to meet the needs of southwest Houston patients."