McLean Enters Joint Venture

The Harvard-affiliated McLean Hospital, New England's oldest private non-profit psychiatric center, has arranged a joint venture with a for-profit, California-based health care corporation, its trustee chairman said this weekend.

The venture with the $2.7 billion American Medical International Inc., of Beverely Hills, Calif., will be announced formally on Thursday, said Francis H. Burr '35, chairman of the McLean trustees and a former member of the Harvard Corporation.

The proposed venture, which officials have emphasized would not compromise any of McLean's teaching, research or patient-care capabilities, would use McLean's name to market innovative mental health products, according to General Director Francis de Marneffe.

Robert Diener, AIM vice president, proposed in June a venture to develop health care management contacts, community residences, industrial mental health and drug and psychiatric screening programs with McLean's staff members, many of whom are Harvard professors.

According to Diener, the hospital would obtain $11 million in equity and be able to borrow $35 million for capital improvements under the arrangement. In addition, the agreement would provide McLean with as much as $2.5 million annually from business ventures.

Thursday announcement will mark the first time one of the Harvard-affiliated hospitals, which engage primarily in teaching, research and non-profit patient care, has entered into any such agreement with a for-profit corporation.

McLean has long needed funds for renovations of its facilities and other necessities which it has not had the revenues nor the endowment to complete in the recent past.

Burr said the parties had agreed to withhold details until the formal announcement.

"It's a joint venture agreement," he said, "a little separate outfit that will be jointly owned by us. Even that is more than I can say at this time."

McLean has 328 beds and is operated by the Harvard-affiliated Massachusetts General Hospital.

AIM is the country's oldest investor-owned health care firm and operates 100 general hospitals and 50 other health care centers in the United States.

"There is no merger," Burr said. "McLean will be operated exactly the same as before. It will remain non-profit and remain under the control of the same trustees."

Burr said he did not want any misunderstanding about the new arrangement after hospital staff members two years ago protested the proposed sale of McLean to the Nashville, Tenn.-based Hospital Corporation of America.

In part because of McLean's need for increased revenues, Burr and other trustees in 1983 had entertained a sale to HCA, one of the world's largest health care organizations. But strong faculty opposition to the move convinced the directors to turn HCA investors away.

Faculty members at the time argued that a for-profit takeover of the hospital would compromise academic freedom and the hospitals status as a teaching facility. If consumated, the takeover would have been unprecendented for such an institution.

The American Medical deal, in the making for about one and one-half years, became public early last summer. McLean's Board of Trustees preliminarily approved the move this fall, although planning has continued to this date.