Immediate (November 2, 2004)

Mike Noble

Fletcher Allen Public Relations

(802) 847-2886

Fletcher Allen, University of Vermont Forge Education Center Agreement

BURLINGTON, VT - Today, Fletcher Allen Health Care notified Banking, Insurance, Securities and Health Care Administration (BISHCA) Commissioner John Crowley that it has signed an agreement with the University of Vermont regarding the Education Center portion of the Renaissance Project.

Under the agreement, the University has paid Fletcher Allen an additional $400,000 to account for changes in the project since the original agreement was completed in 2000.  Under the 2000 agreement, the University contributed real estate and $9.5 million to pay for its portion of the jointly-funded Education Center.  A review of that agreement was a condition of state approval for the Renaissance Project.

Under the newly-signed agreement, the University has paid Fletcher Allen $300,000 to resolve all issues, apart from specific construction change orders, that have arisen since the Education Center contract was signed in August 2001. An additional $100,000 was paid to Fletcher Allen to address the specific, outstanding construction change orders related to specification changes in items such as the type of lockers to be installed and the number of bathroom fixtures. 

The University also released to Fletcher Allen approximately $5 million held in escrow to secure performance under the original contract and has released the requirement of a letter of credit as additional security.  Release of the escrow funds has improved Fletcher Allen's financial position.

One of the conditions of BISHCA's November 2003 approval of the Renaissance Project CON required Fletcher Allen to review the original contract with the University and discuss amending it "due to events or results which have occurred since the contracts were entered into."  Those discussions began over a year ago, before the CON approval was issued.

Expected to cost approximately $19 million, the Education Center contains new classrooms, the medical school library, a new auditorium, and connects the new patient care buildings with the College of Medicine. It also contains shell space that was originally intended to be meeting and conference rooms.  Fletcher Allen postponed finishing the rooms in a cost-cutting move in 2002.

In addition to the Education Center constructed jointly with the University of Vermont College of Medicine, Fletcher Allen's Renaissance Project includes a new Ambulatory Care Center, an expanded emergency department, a new birthing center, a new inpatient psychiatry unit, a new surgery center with eight additional operating suites, a new central plant, and a new 1,200-space underground parking garage.