Jefferson County, Alabama

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Jefferson County Commission Considers Resolution On Entering A Due Diligence Period With UAB Health System On Creating A University Health Authority

Birmingham, AL – In its pre-commission meeting Tuesday theJefferson County Commission voted 3-2 to consider a resolution on entering adue diligence period with UAB Health System to  negotiate an agreement tocreate a University Healthcare Authority. That resolution will be voted on atits regularly scheduled commission meeting at 9 a.m. April 18. 

There is a lot of information circulating about thisproposed resolution and what it would mean for the patients and employees ofCooper Green. Here are the facts:

·        Cooper Green has a specific revenue source toprovide care to the indigent population in Jefferson County.  The primaryrevenue sources for the Indigent Care Fund are derived from the County’s(one-cent) General Sales and Use Tax and the County’s Alcoholic Beverage Tax,which is levied on all retail sales of alcoholic beverages, other than beer orwine, at a rate of 6%.

·        Cooper Green also receives revenue from certainpatient charges. For the periods ending September 30, 2017 and 2018 revenueswere $55.8 million and $61.8 million respectively.  Expenditures duringthe same time period were $63.4 million and $53.6 million.

·        Cooper Green currently has to follow JeffersonCounty’s major operating functions to include Human Resources, Purchasing andContracting. This creates some inefficiencies for Cooper Green to effectivelyprovide indigent health care services. Transitioning Cooper Green fromJefferson County’s operating structure provides it with the necessaryflexibility to more effectively manage cost and provide health care to a widerrange of Jefferson County’s indigent population

The creation of a University Healthcare Authority provides anumber of advantages and synergies to provide health care to the indigentpopulation:

  • TheUniversity Healthcare Authority will assume the risk of cost overages as itrelates to healthcare expenditures above a capitated rate.  
  • TheUniversity Healthcare Authority and Cooper Green will share operational costsin reference to lab work and pharmacy operations. This will create cost savingsby allowing Cooper Green, through the Authority, to share in UAB’s Lab andpharmacy network.   
  • The University Healthcare Authority will have a more robust IT infrastructure,built and tested through UAB, that encompasses billing, credentialing andpatient utilization which greatly increases efficiency and reducescost. 
  •  The University Healthcare Authority will have the advantages of a largerpurchasing operation through UAB.  

Different operating models have been sought and considered,however to date the other options have not demonstrated a cost saving analysisthrough cost sharing or any healthcare expenditure reduction measures.

Another question is what would happen to Cooper Greenemployees. If a University Healthcare Authority is created current Cooper Greenemployees would be given employment opportunities with the new organization. Inaddition, current physician contracts would not be disrupted prior to the endof their current agreed upon terms.

It is important to remember that a due diligence period is atime to work out specific details of an agreement and how a transition wouldhappen. The resolution before the commission Thursday allows the county toenter discussions to work out those details and finalize an agreement.Completion of this process is expected to take several months.