Florida State University reaches agreement with City of Tallahassee on terms to transfer city-owned hospital assets and create an academic health center
Tallahassee, Florida – Florida State University and the City of Tallahassee have reached an important milestone in the evolution of healthcare in North Florida. The two parties have agreed on a proposed Memorandum of Understanding (MOU) that will serve as the framework for transferring all city-owned hospital assets currently leased to Tallahassee Memorial HealthCare, Inc., to Florida State University. The City Commission is scheduled to consider the MOU during its regularly scheduled meeting on January 14, 2026, at City Hall, located at 300 S. Adams St., beginning at 3 p.m.
The agreement marks the first step in transforming the city hospital into a full-fledged academic health center, operating under the umbrella of FSU Health. This new initiative will integrate research, clinical care, and medical education into a single healthcare ecosystem designed to bring innovative medical treatments directly to patients across North Florida. “Florida State University is committed to investing in the future of healthcare while expanding our mission of education and research,” FSU President Richard McCullough said. “We appreciate the support from the City of Tallahassee and look forward to establishing an academic health center in North Florida.”
A critical component of the MOU ensures that charity care and indigent care will remain in place, continuing to provide services at least as generous as current levels. The agreement also includes a long-term financial plan in which FSU will invest $1.7 billion in the local community over the next 30 years. This investment encompasses multiple components: a 30-year contribution to citizens as payment for city-owned assets, a near-term investment aimed at improving local hospital facilities and funding research grants, and a long-term plan to support the construction and operation of new clinical and laboratory spaces.
Of the total investment, $109 million will be allocated over three decades to recognize the original public investment in the facilities. In addition, $250 million will be dedicated by 2034 to upgrade existing hospital infrastructure, support clinical faculty, and expand research capacity. The remainder of the $1.7 billion commitment will be used to develop new clinical and laboratory spaces, ensuring the academic health center can grow alongside FSU Health’s expanding footprint.
“This agreement charts a bold, transformative path forward,” Tallahassee Mayor John Dailey said. “Thanks to the dedication of professionals who refuse to accept the status quo, the future of healthcare in Tallahassee will be better. By aligning our hospital with one of the state’s premier universities to create an academic health center, we are redefining healthcare in a way that positively impacts the lives of residents locally and across the region.”
Academic health centers like the one proposed for Tallahassee are university-affiliated healthcare institutions that combine patient care, medical education, and research. These centers often serve as regional hubs for specialized care that is not available at smaller community hospitals. By creating a university-linked academic health center in Tallahassee, FSU Health will provide world-class medical training, expand specialty services, and conduct cutting-edge clinical research. This development is expected to reduce the need for North Florida residents to travel outside the region for advanced care while attracting patients and specialists from other areas.
The economic implications of the proposed transfer are also significant. The City of Tallahassee’s Office of Economic Vitality conducted an initial economic impact assessment using data from the U.S. Department of Commerce, Bureau of Economic Analysis, and its Regional Input-Output Modeling System (RIMS II). When combined with the $1.7 billion investment commitment outlined in the MOU, the analysis projects a conservative economic impact of more than $3.64 billion and the creation of over 900 jobs over the next 30 years. The investment is expected to serve as a long-term economic engine, benefiting the local economy well into the future.
The MOU also establishes a governance framework to protect vulnerable populations and ensure that the hospital maintains its charitable mission. Under the agreement, the hospital will be positioned to grow its capabilities, enhance patient care, and expand its research infrastructure while serving as a training ground for the next generation of healthcare professionals. The transfer to FSU Health is expected to elevate the quality of hospital services throughout Tallahassee and North Florida, expanding access to specialized care and integrating academic resources into the clinical environment.
The proposed agreement represents a significant collaboration between higher education and municipal government, demonstrating a shared commitment to improving healthcare outcomes, advancing medical research, and supporting long-term economic growth. By aligning city-owned hospital assets with a university-based health system, the City of Tallahassee and Florida State University are setting the stage for a new era of healthcare innovation in the region.
Once finalized, the academic health center will serve as a model for how city assets and university resources can be leveraged together to improve community health, strengthen medical education, and foster cutting-edge research. For residents, the transfer promises not only improved access to high-quality healthcare but also the opportunity to benefit from services and treatments informed by the latest medical research.
As the City Commission prepares to vote on the MOU in January, local officials, medical professionals, and community members are watching closely. The successful implementation of this transfer could transform the healthcare landscape of Tallahassee and North Florida, creating lasting benefits for patients, students, and the local economy for decades to come.
This initiative underscores the growing role that academic institutions play in shaping the future of healthcare delivery, emphasizing collaboration, innovation, and community impact as core principles of the new FSU Health academic health center.
