UH Restructuring Reaches Georgia Supreme Court

Back in the early 1980s, University Hospital was legally limited by the Hospital Authority — the governing body of the hospital – to provide health services only to Richmond County.

But, University’s patient base already stretched well beyond Richmond County and into neighboring areas such as Columbia County and South Carolina. “We knew that it had to expand even wider and wider if we were going to continue to be not only a primary facility and a secondary facility,” said University Hospital’s then-administrator Ed Gillespie. “But as we expanded our services, we wanted to be a tertiary facility with heart services and neurosurgery, and all of those expanded programs that were necessary in order for us to truly be a health care and medical center.”

In May 1984, the Hospital Authority approved a new strategic plan charting University Hospital’s expansion. The development called for a major restructuring into four distinct corporate entities: University Health Inc., a nonprofit holding company; two nonprofit lessees for the hospital and extended care facilities, respectively; and University Health Resources Inc., a for-profit arm.

However, in February 1985, Richmond County’s Board of Commissioners filed a lawsuit that aimed to halt the restructuring effort. “Opponents claimed that University would be less accountable if operated by a private company holding a 40-year lease to the facility,” but the goal of the restructuring was to give University more flexibility to compete in the new health care landscape. The resultant operating company, University Health Services Inc., “would be directed by a nonprofit, community board whose members were appointed by the Hospital Authority and whose meetings were open to the public.” The Augusta Chamber of Commerce, as well as University’s staff, supported the restructuring effort.

The particular agreement that leased University Hospital to the University Health Services Inc. parent organization was initially struck down by the Superior Court, “on the basis that it was motivated by an impermissible intent to operate outside of Richmond County.” In October of that year, the case went to the Georgia Supreme Court. Richmond County Hosp. Auth. v. Richmond County overturned the lower court’s decision, effectively making University “free to expand its services to better serve its community.”

University Health Services wasted no time. In early 1986, it started construction on a health care campus in Columbia County. The following year, the Augusta Resource Center on Aging was formed as a collaboration between University Hospital and St. Joseph Hospital, and ground was broken on their joint venture, Walton Rehabilitation Hospital. In 1988, another joint venture announced plans for a retirement community in Columbia County. This would grow to become the Brandon Wilde Life Care Community, which accepted its first residents in October 1990.

University Hospital transitioned fully to University Health Care System in 1998 and today stretches across 25 counties in Georgia and South Carolina. The Georgia Supreme Court case of 1985 proved to be the key turning point that enabled this tremendous expansion of service.

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