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St. Luke's Purchases Kelsey-Seybold Management Services

Houston (April 8, 2002) – St. Luke’s Episcopal Health System has finalized the purchase of the Kelsey-Seybold Management Company, officially joining St. Luke’s with Houston’s largest community-based multispeciality physician group – an entity with more than 20 locations and more than 250 physicians.

“St. Luke’s and Kelsey-Seybold both come to this transaction from positions of strength,” says Michael K. Jhin, president and CEO of St. Luke’s Episcopal Health System. “Both are thriving. Both have strong business models. The reasons for partnering at this stage in our organizations’ lives are to benefit our long term strategic growth, not to fill hospital beds today or next year. St. Luke’s is planning for the next five, 10 and 20 years.”

Both St. Luke’s and Kelsey-Seybold are in an expansion mode. St. Luke’s has just opened the Texas Heart Institute at St. Luke’s Episcopal Hospital ‐ The Denton A. Cooley Building, and construction is well underway on a new full service hospital in the Woodlands that will open in April, 2003. Kelsey-Seybold is hiring more physicians and debuting the new Willowbrook Clinic.

In February, St. Luke’s announced it would purchase The Methodist Health Care System’s 50 percent interest in Kelsey-Seybold. In 1999, St. Luke’s and Methodist purchased the assets of the physician practice of Kelsey-Seybold Clinic and related real estate from Alabama-based MedPartners, Inc., a transaction heralded at the time as one of the largest of its kind.

Kelsey-Seybold Medical Group, P.A., the physician group, is not part of today’s business transaction and will remain a separately organized professional association with a management services agreement with St. Luke’s.

“Together, St. Luke’s and Kelsey-Seybold are stronger than separately,” said Dr. Spencer Berthelsen, chairman of the board, Kelsey-Seybold Clinic. “The Greater Houston area community can count on the continued success of both. Our patients and their family members are likely to see offerings that contain aspects of both inpatient and outpatient care, as we collaborate more closely together.”

Mr. Jhin says the collaboration is evidence of the strategic acumen of both organizations. “It makes tremendous business sense for St. Luke’s, which wants to ensure the business stability of a major referring group, and for Kelsey, which refers the majority of its patients to St. Luke’s, to be business partners, to make business decisions in concert with one another, to be able to plan together. St. Luke’s strategy is to partner with a successful group practice that has consistently been able to provide quality healthcare services while effectively managing medical expenses.”

Kelsey-Seybold physicians will continue to manage all aspects of patient care and access to services, as they always have. Founded in 1949, the Kelsey-Seybold Clinic offers the expertise of physicians in 39 specialties and subspecialties, practicing at locations throughout the community. Kelsey-Seybold physicians care for more than 300,000 patients through health insurance and managed care plans, employer groups, the U.S. Department of Defense and the National Aeronautics and Space Administration (NASA). Its research affiliate, the Kelsey Research Foundation, is engaged in outcomes-based research studies designed to improve community health through information and education.

St. Luke’s Episcopal Hospital, located in the world-renowned Texas Medical Center, has 945 licensed beds. The hospital was founded in 1954 by the Episcopal Diocese of Texas. Today it is the flagship that anchors St. Luke’s Episcopal Health System, a comprehensive network of services designed to meet the primary and specialized health care needs of a diverse community – a community that includes patients from more than 80 countries. St. Luke’s serves as a teaching hospital for both Baylor College of Medicine and the University of Texas School of Medicine. St. Luke’s is also home to the world-renowned Texas Heart Institute, founded in 1962, which is consistently ranked as one of the top cardiovascular centers in the nation by U.S. News & World Report. In 2001, St. Luke’s earned the first Magnet designation in Texas, the highest national honor in patient care. FORTUNE magazine and the Houston Business Journal both recently named St. Luke’s to their “Best Places To Work” lists. St. Luke’s believes that the best cared for employees make the best caregivers.

About Kelsey-Seybold

Kelsey-Seybold Clinic is Houston's premier multispecialty group practice, founded in 1949 by Dr. Mavis Kelsey in Houston's renowned Texas Medical Center. More than 850 physicians and allied health professionals practice at 40 locations in the Greater Houston area. Kelsey-Seybold offers quality medical care in 65+ medical specialties. The organization operates the largest freestanding Ambulatory Surgery Center in the state of Texas and offers state-of-the-art Varian TrueBeam and Varian Edge radiation therapy technology at a nationally accredited Cancer Center. An accredited Sleep Center, comprehensive laboratory services, advanced imaging and diagnostics, 24 onsite Kelsey pharmacies and one specialty pharmacy, and MyKelseyOnline, a secure web portal, are part of its comprehensive offerings. Kelsey-Seybold partners with major insurers to offer value-based commercial health plans. KelseyCare Advantage, a Medicare Advantage plan offered to Houston-area beneficiaries and affiliated with Kelsey-Seybold Clinic, has achieved the coveted 5-out-of-5-star rating from the Centers for Medicare and Medicaid for eight consecutive years.

Kelsey-Seybold has been recognized by the National Committee for Quality Assurance (NCQA) as the nation’s first accredited Accountable Care Organization and is home to a nationally accredited Breast Diagnostic Center and Endoscopy Center.

Kelsey-Seybold Clinic achieved a Net Promoter Score (NPS) of 91. NPS is the global standard for measuring customer loyalty and satisfaction. An NPS score of 70 or higher is considered by industry experts to be "world class" and an indicator of overwhelming customer loyalty.

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