To: Memorial Health Board of Trustees, Leadership, Medical Staff and all Team Members From: Carl S. Armato, President and Chief Executive Officer Date: May 9, 2016 Subject: Memorial Health-Novant Health Partnership I regret to announce that, after months of negotiations, Novant Health has decided to terminate negotiations of a transaction that would have allowed Memorial to fully join our organization. I was optimistic that this partnership would allow us to help enhance and grow care in the Savannah market and strengthen Memorial financially so it can continue its mission of providing care to all. Our entire organization was excited when the Memorial Health Board of Directors voted unanimously in an open session to authorize our new partnership and to approve the Member Substitution Agreement (“MSA”) we negotiated. The MSA included a $295 million commitment to fund capital projects to grow and expand several services at Memorial, including the Children’s Hospital of Savannah; ambulatory expansion in Pooler, Georgia; expansion of heart and vascular services; and additional critical care beds. It also included a commitment to guaranty repayment of the Memorial’s bond debt and to continue critical service lines, such as trauma and neonatal care. The MSA also made clear that the Memorial board (including the four members appointed by the Chatham County Hospital Authority) would be retained to ensure local oversight. Unfortunately, discussions became more complicated after the Memorial Board approved the MSA and the Authority became directly involved in the discussions. The Authority has indicated its intent to go beyond its historical role and has insisted upon inserting itself into the detailed oversight of Memorial operations, potentially resulting in inconsistent direction from two different governing bodies. It has become clear to us at Novant Health that there is a lack of alignment among the Authority, the Memorial Board, and the other local stakeholders. We do not believe the proposed partnership would be successful in such an environment. Under the approach advocated by the Authority, we would lack the flexibility to implement best practices quickly and to meet the demands of the rapidly changing healthcare landscape. I know many of you invested a significant amount of time trying to get this partnership with Novant Health in place. I can’t thank you enough for your support and confidence. We have the highest respect for the Memorial Health Board, management team, and team members. As we all look to the future I ask you to continue to support Memorial Health, and the Authority, as they work to secure their future and serve your community.
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