By Zach Wendling | Nebraska Examiner
Lawmakers say they’re reviewing board shakeup; one called it the ‘nuclear option’
LINCOLN — The University of Nebraska and Clarkson Regional Health Services are replacing nearly all members of the Nebraska Medicine Board of Directors as NU moves forward with an $800 million deal for sole ownership of the nonprofit medical provider.
The restructuring could end a lawsuit pursued by the Nebraska Medicine board to stop the deal. A majority of four new voting members, all NU and Clarkson leaders, support the deal.
“[NU and Clarkson] have since determined that this action was necessary to protect the organization’s reputation, stability, and future, and to ensure it can continue to fulfill its charitable mission effectively long into the future,” NU and Clarkson said in a joint statement.
Legal fights escalate
The NU Board of Regents announced in a Thursday news release that it, along with Clarkson, had filed new articles of incorporation for Nebraska Medicine with the Nebraska Secretary of State’s Office. The amended articles were filed shortly after 8 a.m. Thursday. NU and Clarkson have overseen the nonprofit hospital and clinic partner of the University of Nebraska Medical Center in a 50-50 split since 1997.
The NU-Clarkson transaction includes NU paying Clarkson $500 million for its 50% stake in the nonprofit, plus $300 million for related properties. The deal is expected to close by June 30.
After the transaction finishes, Clarkson has pledged to donate $200 million back to NU for “Project Health,” a $2.19 billion endeavor to build up the next generation of health care.
Regents say the Nebraska Medicine changes are needed because NU and Clarkson “have serious concerns about recent actions and behavior” of previous Nebraska Medicine board members. NU and Clarkson argue those actions “threatened critically important mission-driven strategic initiatives.”
The NU regents on Jan. 8 asked the Nebraska Attorney General’s Office to investigate the nonprofit board, too.
“We have initiated a thorough review of these allegations,” an AG’s Office spokesperson said in a text last week. “Any investigation our office conducts will remain strictly confidential.”
The Nebraska Medicine board, before the changes, pushed back on those claims before and said they had “no merit” and said they were an effort to distract from questions about the NU-Clarkson deal. The former board members said they had been left out of meaningful negotiations, including a possible alternative.
In a statement last week issued by the nonprofit’s former leadership, the board said it “must uphold its fiduciary duties to Nebraska Medicine, and our opposition to and questions about the regents’ transaction fully [align] with that duty.”
‘Transformative transaction’
According to the joint statements Thursday, NU and Clarkson said they desired to complete the “transformative transaction” without board changes. They say the changes came after a “careful review of current circumstances,” Nebraska Medicine’s governing documents and the law.
The four voting members will be:
- Dr. Jeffrey Gold, president of NU since July 2024 who previously served as chancellor of the University of Nebraska Center beginning in 2014.
- Dr. Dele Davies, interim UNMC chancellor who will chair the “interim” board.
- Dr. Bill Lydiatt, a retired surgeon and CEO of Clarkson Regional Health Services.
- Stephanie Moline, a current Clarkson board member and retired executive vice president of First National Bank Omaha.
Only Davies was actively on the board before Thursday. Gold was a member during his time as UNMC chancellor, starting as the inaugural board chair in 2016.
There will also be four nonvoting members who all previously served on the Nebraska Medicine board by virtue of their positions. They are the dean of the UNMC College of Medicine, chair of surgery in the UNMC College of Medicine, Nebraska Medicine’s chief nursing officer and chief of staff of The Nebraska Medical Center medical staff.
The changes remove Nebraska Medicine’s CEO, Dr. Michael Ash, and seven other members, including Lance Fritz, the previous chair, who led opposition to the NU-Clarkson changes.
Fritz, who was president and CEO of Union Pacific between 2015 and 2023, did not immediately return a call seeking comment Thursday.
‘Came out of left field’
The day before the vote last week, NU and Nebraska Medicine hosted competing forums with state lawmakers on the deal. In the wake of Thursday’s board restructuring, multiple senators said they needed to review what had happened before commenting.
State Sen. Eliot Bostar of Lincoln called the board changes the “nuclear option.” Another senator said it was like adding gasoline to a fire.
Multiple senators described the situation as a “clash of the titans,” which was only made public Jan. 2 after strict non-disclosure agreements. The deal proceeded in less than two weeks.
State Sen. Merv Riepe of Ralston, a former hospital administrator, said he worried about impacts to the Omaha philanthropic community.
State Sen. Tony Sorrentino of the Elkhorn area proposed Legislative Bill 1125 this year at Nebraska Medicine’s urging. It would require any such NU deals for hospitals above $100 million to obtain legislative approval.
Thursday’s action might increase pressure for lawmakers to step in.
“Came out of left field,” Sorrentino said Thursday of the board restructuring.