After months of negotiations, Washington, D.C.-based George Washington University and King of Prussia, Pa.-based Universal Health Services reached a deal May 26 to restructure the university’s physician practice group arrangement.
The deal transitions financial responsibility of GWU’s struggling physician practice group, Medical Facility Associates, to Universal, who will fold the group into a new nonprofit entity controlled by UHS, called Capital Medical Group.
GWU will maintain its existing academic and educational affiliations with the group, which said it intended to hire the majority of MFA’s physicians and staff. Capital Medical will occupy most of MFA’s physical locations in an effort to maintain consistency in care sites. Capital Medical will also provide services to GW Hospital, Cedar Hill Regional Medical Center and affiliated outpatient sites.
The deal introduces a novel physician contracting structure, as the university offloads its financial and operational risk while aiming to preserve its academic mission as Universal effectively acquires control over a large physician group without a traditional acquisition.
As academic medical centers continue to operate under intensifying cost pressures, the deal could introduce new methods for controlling losses while maintaining mission-focused affiliations and operations.
Here’s a look into how the new contract between GWU and UHS came to be and what it could mean for the industry.
What happened?
MFA was founded as an independent physician practice group affiliated with the university. The group’s profitability began to waver before its affiliation with the university, facing deficits in 2015 and 2016 according to The GW Hatchet. This led to GWU lending MFA $20 million in 2016 after the enterprise exceeded its budget by $61 million.
In 2018, the university brought MFA formally under its control, locking the university into consecutive years of losses that totaled about $450 million by fiscal 2025.
In September 2025, GWU President Ellen Granberg, PhD, told the Hatchet that negotiations began “progressing in earnest” between the university and Universal as they sought to end GWU’s financial support for the MFA while supporting its medical education goals with the physician group.
A new form of ownership
The structure created by the deal underscores similar questions about physician group ownership that were raised concerning the contracting controversy between Vancouver, Wash.-based PeaceHealth and its emergency department staffing firm, Eugene (Ore.) Emergency Physicians. That deal became the first test of Oregon’s strict corporate medicine law, which was specifically designed to prohibit structures wherein a nominally physician-owned entity is functionally controlled by an outside corporate group.
The GWU, UHS and CMG scenario differs in that it is a voluntary arrangement and carries an explicit nonprofit designation, preserving faculty appointments and academic ties in a way that most staffing arrangements do not.
Yet in an online FAQ about the deal published May 26 in GW Today, Dr. Granberg acknowledged that work still remains on maintaining an agreement that supports the goals of all parties involved, including preserving clinical autonomy and supporting educational and research missions.
“We achieved the core outcomes we needed: a sustainable framework, continuity of clinical services and a structure that maintains faculty roles and supports our education and research missions,” she wrote. “At the same time, I want to be candid — agreements like this involve trade-offs. No one gets everything they want. What mattered to me is that we reached an outcome that protects the people and the missions we are responsible for and that positions GW well for the future.”
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