Nebraska Medicine takeover coming as university health systems across the US eye expansion

As they sought to address concerns about the planned purchase of the state’s largest hospital system, University of Nebraska leaders stressed the move would align NU with peer institutions, places like the University of Michigan. 

There, the university health system maintains complete ownership of the flagship hospital. But the system also has ballooned in recent years by purchasing and investing in other hospital chains across the state.

Michigan is one example of a larger national trend. Across the country, university hospitals are looking to “expand their footprint” — not just in their cities, but to become the largest health care systems in their states, said Neal Hutchens, a professor at the University of Kentucky who studies higher education policy.

In Nebraska, both the University of Nebraska Medical Center (NU’s medical school) and Nebraska Medicine (a nonprofit hospital system long co-owned by the university) have seen their own growth in recent years. 

UNMC’s operating budget has more than doubled in the past decade and seen steady growth in enrollment and staff size. Nebraska Medicine’s net assets have also more than doubled between 2018 and 2024, according to the nonprofit’s tax filings.

Despite the general trend of growth across the country, Hutchens and other health policy experts said the Nebraska Medicine situation is unique, even in situations involving restructured ownership.

“There’s a lot of variation in terms of how these enterprises are structured corporately … but I’ve never heard of anything quite like this,” said John McDonough, a professor in the Department of Health Policy and Management at Harvard University.

In January, NU announced its plan to buy out Clarkson Regional Health Services’ stake in Nebraska Medicine, the nonprofit hospital system that the two entities have co-owned for decades. Leaders framed the $800 million deal, which stemmed from Clarkson’s desire to exit the hospital business, as a “win-win” for patients, students and the university system.

Not everyone agreed. In the weeks that followed, Nebraska Medicine’s board — consisting of members appointed by the university and Clarkson — sued to block the deal. Days later, the university and Clarkson dismissed the board and appointed interim members. On Monday, Nebraska Medicine announced it was dropping its lawsuit. 

Dr. H Dele Davies, UNMC’s interim chancellor, said he doesn’t believe consolidated ownership will change Nebraska Medicine or the University of Nebraska Medical Center’s long-term plans. 

Davies said he sees Nebraska Medicine staying in its current lane, rather than competing with other Nebraska hospitals, by continuing to focus on highly specialized care for complex and rare conditions. Meanwhile, UNMC will continue to focus on growing its clinical trials network across the state.

Nebraska Medicine isn’t likely to follow the trend of buying hospitals and health care chains seen in Michigan and elsewhere, Davies said.

“Generally speaking, Nebraska Medicine has not been in the business of purchasing hospitals, as you can tell. That’s not been the direction,” Davies said. “They partner more with local partners than purchasing hospitals.”

What’s the deal?

Nebraska Medicine has long been an independent nonprofit jointly owned by the University of Nebraska and Clarkson Regional Health Services. The two organizations initially merged hospitals in 1997.

In July 2024, Clarkson leaders approached the university’s Board of Regents and expressed interest in selling its share. 

The deal announced in January involved the university paying Clarkson $500 million for its share of Nebraska Medicine and $300 million for Clarkson-owned real estate. As part of that deal, Clarkson has said it would make a $200 million donation to UNMC’s Project Health, a $2.19 billion health care facility on the Omaha campus.

The sale was not planned or initiated by the university, Davies said, and the organizations have shared a good partnership over the years.

“There was nobody from UNMC or the Board of Regents that went to Clarkson and said we would like it to leave,” Davies said. “It was the opposite.”

Two weeks after the announcement, the NU Board of Regents unanimously approved the $800 million purchase. The next day, Nebraska Medicine’s board sued to block the buyout, arguing that it had been cut out of the process — a violation of the joint operating agreement under which Nebraska Medicine operated.

The wave of resistance that followed the university’s early January announcement was not limited to Nebraska Medicine’s board. 

State lawmakers asked regents to postpone a vote on the deal to allow more time to review it. Then, Sen. Tony Sorrentino, a Republican from Omaha, introduced a bill that would require future purchases of hospitals or health care facilities for more than $100 million by the university be approved by the Legislature.

Hutchens, the researcher from the University of Kentucky, said the pushback surprised him. Often multimillion-dollar deals occur without drama because the entities involved work out the kinks and reach a consensus before an announcement, he said.

The only other situation he could recall state lawmakers attempting to intervene in came in Kansas and Missouri. Lawmakers in both states opposed a plan for the University of Kansas Health System to acquire Liberty Hospital in Kansas City, Missouri. Those measures ultimately failed, and the deal went through in 2024.

“That was indicative of how new it is to have these university health systems … because people were like, ‘What? University of Kansas is buying a hospital in Missouri? What’s happening here?’” Hutchens said. 

After the Nebraska Medicine board filed the lawsuit, the university and Clarkson replaced Nebraska Medicine’s board with a smaller interim board composed of leadership at the university and Clarkson. On Monday, that board filed to dismiss the lawsuit.

Though it will be under the university’s full ownership, Nebraska Medicine will continue to be a separate 501(c)(3) nonprofit organization, said Paul Kenney, chairman of the Board of Regents. The partnership between UNMC and Nebraska Medicine will be the same as always, Kenney said.

“I just want to put it in context that right now the Board of Regents already have a 50% stake in Nebraska Medicine,” Davies said. “They already have the ability to approve or reject any board member. That’s not going to change. That’s not going to be a new thing.”

Nebraska Medicine’s current board is temporary, Kenney said, and will change again once the deal, expected to close this summer, is finalized.

Sprawling systems

Much of the opposition stemmed from concerns that Nebraska Medicine’s resources, if fully under the purview of NU, could be used to fill budget gaps elsewhere in the university system.

But Hutchens said the growth of a university’s health system in some cases has led it to dwarf the flagship campus. He pointed to the University of Alabama, where its medical center in Birmingham has outpaced its flagship in Tuscaloosa in research funding and employees, becoming an “economic juggernaut,” Hutchens said.

The University of Nebraska Medical Center has grown significantly over the past decade. From 2016 to 2026, its annual operating budget has more than doubled, growing by 53%. 

Over the same time period, operating budgets at NU’s other campuses increased at slower rates. The University of Nebraska-Lincoln grew by 37%, and the University of Nebraska at Kearney grew by 12%.

“There’s been a lot of talk about … how we may be struggling financially. UNMC has always had a balanced budget,” Davies said. “We do not have a structural deficit.”

That financial growth didn’t come from the state, Davies said, but rather from UNMC’s research portfolio, increasing student enrollment, contracts and donations.

Growth has also long been Nebraska’s Medicine’s strategic plan, said Dr. Daniel DeBehnke, who served as its CEO from 2016 to 2018.

“We wanted to grow and get bigger and be a national and international player and really own the market,” said DeBehnke, who, along with two other former Nebraska Medicine CEOs, signed a letter opposing NU’s takeover of Nebraska Medicine.

Professors at the University of Nebraska-Lincoln, the system’s flagship campus, are concerned about the lasting financial impact of the $800 million deal, according to Faculty Senate President John Shrader. The Board of Regents in December approved $27.5 million in budget cuts at UNL, resulting in the elimination of four academic programs.

There hasn’t been enough transparency around the deal and how it will be funded, Shrader said, especially for a public institution.

“As observers, we’ve seen universities grow their medical centers immensely … I don’t know how that’s going to impact us directly, but I’d be naive to say that it won’t impact us at all, because it almost certainly must,” Shrader said.

Nebraska’s peer schools in the Big Ten conference have a variety of governance models for affiliated health systems, according to a Flatwater analysis. Seven of the 18 schools have university-owned systems like Nebraska is working toward. The other 11 are a mix of affiliated nonprofits and partnerships. 

“These days, academic medical centers have all kinds of other parties and ventures, some of them nonprofit, some of them for profit,” McDonough said. “This is a thick, dense arena.”

The most similar governance model to Nebraska’s old model is M Health Fairview, a collaboration between the University of Minnesota, private nonprofit Fairview Health Services and University of Minnesota Physicians, a private nonprofit faculty group. Like Nebraska, the partnership has undergone recent changes.

Negotiations to renew M Health Fairview’s contract, which was set to end in 2026, lasted several years, culminating in a seven-week mediation with the Minnesota Attorney General’s Office. In January, they approved an agreement to continue for 10 years with more separation in responsibilities and to sunset the shared brand.

There’s no model for running these growing systems that is considered better or worse, Hutchens said. Often, there will be a separate governing entity from the university board, but top university leaders may have ultimate control. 

“They probably are wanting to become more like what they’re seeing in their peer systems, where it’s a governing board that may be separate from the university, but really falls under it,” Hutchens said.

DeBehnke said peer schools that have successful health systems fully controlled by the university, like Michigan Medicine and UCLA Health, share a common trait: strong public funding. 

“They’ve got super strong university finances,” DeBehnke said. “And so there’s not any need to be tapping into or slowing down the health system’s strategy.”

Other schools, like University of Pennsylvania and Vanderbilt University, DeBehnke said, have struggled because their health systems have gotten tied up in university politics and finances.

Some universities have avoided those problems, DeBehnke said, but with current dynamics in the health care marketplace, the ability to be agile, access capital and make decisions quickly is paramount to success.

“That’s not saying that the Nebraska Medicine relationship won’t work,” DeBehnke said. “… The question becomes what’s going to happen long term with the university’s finances, the financial issues in Lincoln — it requires some caution.”

The two organizations’ finances are completely separate and will continue to be separate, said Kenney, chairman of the Board of Regents, “so there’s no concern there.”

UNMC and Nebraska Medicine are tied at the hip, like good friends or siblings, Davies said. Both rely on and build on each other, and that’s not going to change, he said.

“We’re going to continue to work together. We have to. I’m telling you, I’m here because I wanted to be part of a world-class university allied with a world-class medical center,” Davies said. “And that’s the same for most of my colleagues who are here.”