As a freestanding, specialty-focused institute, THI’s desire to enhance its relationship with private practice physicians and formalize its evolving partnership with Baylor College of Medicine (BCM) in an academic affiliation posed a unique set of challenges.
The Texas Heart Institute (THI), located within the Texas Medical Center in Houston and founded in 1962, is an independent, nonprofit organization that has been ranked among the top cardiovascular centers in the United States by U.S. News & World Report for more than 30 years. THI performed the first successful heart transplant and total artificial heart implant in the US. Furthermore, THI is considered to be a destination training ground, attracting 80% of the candidates applying for cardiology fellowships in the country.
While a typical academic affiliation may be entered into between a medical school and health system, THI wanted to protect its identity and integrity as a freestanding institute while engaging in a strategically and financially aligned affiliation with BCM.
ECG was engaged to:Working closely with executive, clinical, and academic leaders as well as THI legal counsel, ECG facilitated an iterative process over the course of two years.
In the first phase of work, ECG helped to develop THMG through a comprehensive design process focused on its organization and corporate structure, governance and leadership, and funds flow arrangements. We facilitated discussions with interested private practice groups and conducted financial due diligence; performed financial feasibility analyses to ascertain the required working capital and model a detailed projected income statement for THMG’s formation; and recommended key terms and strategies for a professional services agreement between THI and BSLMC.ECG delivered a detailed organizational structure, a physician employment model with five-year growth estimates and associated financial modeling, a professional services agreement with BSLMC, and clearly defined funds flow arrangements that provided a framework for the financial commitment between THI, THMG, and its academic and clinical affiliates. As a result, THMG—a fully integrated clinical cardiovascular practice encompassing the areas of education, research, and direct patient care—was approved as a licensed medical group by the Texas Medical Board and officially launched as the first-ever clinical arm of THI.
In addition to the launch of THMG, ECG successfully facilitated a planning process to finalize terms outlining the two parties’ shared goals to elevate the level of collaboration and to further capitalize on their combined strengths and reputations with respect to medical education and research. The term sheet was critical to the development of a definitive agreement reflecting a new academic affiliation between THI and BCM.
