LSU System – University Hospital, Baton Rouge

Request for Letters of Interest
Academic Medical Center Campus Development Services

April 9, 2006

Table of Contents

PROJECT INFORMATION
• Project Overview
• Project Background
• Project Goals: Anticipated Program Outcomes
RESPONSE FORMAT
• Expression of Interest
• Experience and Capability
• General Structure and Economics
• Project Site
PROCESS/RESPONSE GUIDELINES
• Process
• Receipt of Responses
• Process Disclaimer
• Process Calendar
• Questions/Requests for Information
• Response Guidelines
• Consideration of Responses

Project Information

Project Overview
Louisiana State University (LSU) System seeks to identify, through an informal request, respondents that are interested in developing, by lease or a combination of lease and LSU ownership, or other appropriate mechanisms, to accomplish the goal of LSU having a complete and fully operational university-based academic health science center in Baton Rouge, Louisiana. As a first step in this process, LSU seeks an expression of interest and qualifications from relevant development entities. See Process Disclaimer below.

LSU desires to have the following goals fulfilled:

1. Securing of a complete University Hospital in or adjacent to the South Baton Rouge Medical Corridor for the development of a new academic medical center that is proximate to other healthcare providers and specialty physicians, as needed to sustain a Level I trauma center. The site must also be proximate to major transportation arteries for access.
2. Obtaining of a campus and corresponding structures to house the resultant academic medical center and supporting facilities.
3. Obtaining of a campus that offers effective space to recruit and retain top-performing faculty physicians and researchers to offer best-in-class healthcare, medical education and clinical research activities.
4. Minimization or elimination of LSU capital investment in this development and future investments of the planned facilities.
5. Creation of a real estate solution that meets these objectives while offering LSU the option of operating the facility itself or engaging an entity to operate the facility upon completion.

The complex may include, but is not limited to:

• An inpatient academic medical facility ranging from 600,000gsf to 850,000gsf.
• An outpatient clinics/faculty academic offices building to support the inpatient facility, connected physically to the inpatient structure. It is currently estimated that there will be 75 exam rooms and administrative space available for approximately 50 members of the faculty.
• A separate services building, housing operational support services and the central energy plant, approximately 100,000gsf.
• Approximately 100 units of on-site housing for students and residents.
• Medical office building capable of housing approximately 80 physician private practice offices, connected physically to the inpatient structure.
• Separate or combined building, housing offices for LSU HCSD administrative functions – approximately 40,000sf.
• Required parking complement for projects above, including some structured parking.
• LSU may also seek the financing of medical equipment planned for the center.

Development entities capable of acquiring land and completing projects of this magnitude are encouraged to submit letters of interest, along with appropriate documentation to support inclusion in the subsequent stages, if any, of an anticipated Request for Qualifications or Proposal process pursuant to statutory provisions.

Broad responsibilities of the development entity may include:

• Financing
• Design of Facilities
• Construction
• Ownership of Completed Facilities
• Asset Management of the Property

Broad responsibilities of LSU may include:

• Oversight and Approval in the Design of Facilities
• Appropriate Involvement in the Construction of Facilities
• Operation of the Facilities for Delivery of Health Care Services
• Contract for Use of Facilities

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PROJECT BACKGROUND

In 2003, LSU HCSD commissioned a Facility Condition Assessment (FCA) of its ten (10) inpatient and outpatient system facilities across the State of Louisiana. Among other items, the FCA study recommended that Earl K. Long Medical Center (EKLMC) in Baton Rouge, Louisiana be replaced, due to its heavily dilapidated state. In addition, the Accreditation Council of Graduate Medical Education (ACGME) had notified EKLMC of the potential loss of accreditation for its medical education activities due to the state and antiquated geometry of its facilities. In July 2004, LSU garnered the resources to commission a strategic business and campus master planning effort for a new replacement facility for EKLMC.

The Strategic Business & Facility Study, University Medical Center Baton Rouge was completed in June 2005. The study envisioned a 175-bed modern academic medical center and Level I trauma center, with a separate ambulatory clinics/faculty offices building located in the South Baton Rouge Medical Corridor. The study provided a fairly balanced business model, along with a proposed site plan, blocking and stacking diagrams and a narrative of the overall functional concept. The vision for the new facility, as put forth in the study, was officially adopted by LSU leadership. (A web version of the study referenced above will be made available.

LSU was contemplating potential financing alternatives for the new facility when Hurricanes Katrina and Rita occurred in August/September of 2005. Although the greater Baton Rouge area did not sustain direct storm damage, it became, overnight, the new population and resource center for the State of Louisiana. The Medical Center of Louisiana at New Orleans (MCLNO), LSU HCSD’s main tertiary-care inpatient facility and teaching platform, was evacuated and shut down. Correspondingly, the other LSU HCSD inpatient facilities became temporary centers for displaced patients, medical students and staff. EKLMC experienced a tremendous increase in activity post-disaster, exacerbating an already tenuous situation.

LSU has resolved to pursue the construction of the new University Medical Center in Baton Rouge with due speed. Demographics have not yet stabilized in either New Orleans or Baton Rouge, and LSU leadership suspects that the original 175-bed vision is no longer adequate for the needs of post-disaster Baton Rouge.

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PROJECT GOALS/ANTICIPATED PROGRAM OUTCOMES

The new replacement facility will fulfill the following programmatic objectives, among others:

• Create the facilities needed for a tertiary-level, modern academic medical center and Level I trauma center.
  • Improve access to and program for treatment services available to the citizens of the State of Louisiana.
  • Enable all private patient rooms for infection control, safety and a quality patient experience.
  • Allow patients to be treated in an environment which provides the necessary level of privacy accorded by law.
  • Provide improved facilities which comply with the accreditation standards of the Joint Commission on Accreditation of
  • Healthcare Organizations (JCAHO), as well as those of the ACGME and state and local codes.
• Provide an environment that allows for enhanced medical education and clinical research activities.
  • Mitigate the need for costly renovation of obsolete and outdated mechanical, plumbing and electrical systems in existing buildings.
  • Integrate state-of-the-art medical and information technology in the new medical center.
  • Provide for prisoner care in separate and discreet quarters.

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Response Format

EXPRESSION OF INTEREST

1. Please forward the relative interest of the development entity to participate in such a venture, incorporating the information requested below.

EXPERIENCE/FINANCIAL CAPABILITY

1. Provide an overview of the respondent’s development and financial capacity to develop large-scale projects of $500.0M or more.
2. List projects of similar size, scope and type that provide evidence of experience and capability. Please list anticipated team members and relevant experience.
3. Disclosures: Please list all business and/or personal/family relationships that the responding entity and team members have with any employee of LSU, the LSU Board of Supervisors and elected officials in Louisiana, local, st
4. ate and federal. Failure to disclose these relationships may be grounds for non-consideration.
   

General Structure and Economics
Note: Payments under any proposed anticipated absolute net lease agreement may be subject to review and approval by the State Legislature and shall not create an indebtedness of the State, within the meaning of any provision of the State Constitution or laws of the State concerning or limiting the creation of indebtedness of the State.

1. Please outline a proposed general ownership, financing, lease and control structure of the anticipated academic medical center.
2. Please discuss anticipated return rate targets (measured by yearly cumulative “cash on cash” return on equity, IRR, or other acceptable metric). Please also fully disclose fee structures/profit centers in the development budget.
3. Please discuss the overall rate of return that the development entity would anticipate, given the following components:

No.	Facility	Desired Rate of Return
1. Sitework and Campus Infrastructure
2. Inpatient Component
3. Outpatient Clinics Building/Medical Office Building
4. Separate Services Building/Administrative Offices
5. Residential Housing
6. Parking Structures

4. Please disclose any other financial constraints, financial returns, or letters of credit outside of the project returns mentioned above.
5. Please discuss initial term of any proposed lease(s), proposed escalations, if any, and endof-term provisions regarding reversion/ownership of assets.

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PROJECT SITE
1. LSU seeks to locate the proposed complex within a radius of the South Baton Rouge Medical Corridor. The planning and proposal should provide for the future expansion and development of complementary facilities. Please provide a description of the site(s) that is/are under control (ownership or option) of the respondent.

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PROCESS/RESPONSE GUIDELINES

PROCESS
LSU anticipates undertaking a defined proposal process pursuant to statutory provisions in the near future. LSU seeks to immediately identify, through an informal process, interested development entities capable of completing such a project.
Entities are asked to respond to this request by the deadline of Tuesday, May 9, 2006.

LSU will take the responses into consideration, and seeks to commence the statutory process within 60 days. No rights are created in respondent by responding to this informal request.

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RECEIPT OF RESPONSES

Please submit four (4) copies of your response to the Request for Letters of Interest to the following:

Mr. Douglas A. Jones Director – Advisory Services
ADAMS Management Services Corporation
401 Broad Street Suite 100
Rome, GA 30161

An additional six (6) copies of the response should be delivered to the following:

Mr. Danny Mahaffey
Director of Facilities and Planning LSU System
3810 West Lakeshore Drive
Baton Rouge, LA 70808

Responses shall be submitted to both parties no later than 5:00 pm on Tuesday, May 9, 2006. It is the responsibility of the respondent to ensure that the submittal is received on or before the opening date and time. Respondents utilizing U.S. mail should allow sufficient mail delivery time to ensure receipt of their responses by the time specified.

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Note: Participation in this informal request process creates no rights in any respondents in connection with further steps. Upon completion of this process, procedures pursuant to statutory and administrative law may be initiated.

LSU reserves the right to cancel this informal process at any time, without penalty. LSU further reserves the right to reject any or all responses, waive informalities and minor irregularities in responses received and to accept any portion of a response or all items proposed, if deemed in the best interest of LSU. Responding entities proceed at their own risk until a contract is executed or until a specific agreement regarding reimbursables is in place.

LSU System shall not be obligated by this informal process to enter into any land lease or building space lease with any party unless the parties have fully negotiated such leases, such leases are in writing, have been fully approved by the LSU Board of Supervisors and senior management of LSU System and executed by all parties.

It is understood and agreed by the respondents that submittals, interviews, etc. are voluntary, and that LSU and/or its employees, agents, etc. are not responsible for any compensation and/or other commitments associated with submittals or interviews.

Any submittals may be subject to the Public Records Laws of Louisiana, including its exceptions, La. R.S. 44:1, et. seq. LSU agrees to provide notice of, and reasonable cooperation and opportunity to object to, any requests for information deemed confidential under that law. All risks of disclosure are assumed by respondent, however.

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PROCESS CALENDAR

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QUESTIONS/REQUESTS FOR INFORMATION
All questions and inquiries concerning this RFI should be delivered by Wednesday, April 19, 2006 via email or in writing to:

ADAMS Management Services Corporation
401 Broad Street Suite 100
Rome, GA 30161 Attn: Douglas Jones Fax: 706.234.7316
Email: djones@adamspmc.com
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RESPONSE GUIDELINES

Contact with LSU employees, its Board members, or persons designated in this informal request process is strictly forbidden with respect to this informal request process after its issuance. Questions should be directed to djones@adamspmc.com. Include the title of this request on the subject line of all emailed inquiries.

All materials submitted will become property of the LSU System and will not be returned to the responding entities, absent special written agreement. LSU System reserves the right to accept or reject any response, for any reason, at its sole and absolute discretion.

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CONSIDERATION OF RESPONSES

The consideration of responses will take into account, among others:

1. Depth of the respondent, including project capabilities and availability of resources.
2. Relative financial capability.
3. Appropriateness of proposed structure and economics concept.
4. Proximity of proposed sites providing optimal access to specialty physicians and major transportation arteries in the South Baton Rouge Medical Corridor.

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