The proposed affiliation of Pleasanton-based ValleyCare Health System and Stanford Hospital and Clinics have become clearer with Stanford agreeing to maintain ValleyCare as an acute care hospital with an intensive care unit, obstetric services and an emergency department for at least five years.

The agreement is part of the affiliation announced earlier in which Standford will maintain ValleyCare's licensed facilities in both Livermore and Pleasanton.

Stanford also will provide a capital commitment of $50 million during the first three years and will be co-obligated on, or guarantee, VCHS's $85 million revenue bonds in order to resolve the current bond covenant compliance issues.

Although ValleyCare will remain in existence as a nonprofit, public benefit corporation with a separate board of directors, it will operate as a subsidiary of Stanford. ValleyCare's corporate members, including some still active who paid as little as $50 to help build Valley Memorial Hospital in 1961, will be terminated as Stanford assumes full operating and management control over ValleyCare.

Some corporate members will be offered membership in the ValleyCare Charitable Foundation, which will continue its philanthropic and fundraising efforts for the Pleasanton organization.

Stanford also will take control of the ValleyCare board of directors, with the new board to have 11 directors, consisting of three Class A directors who will be chosen by ValleyCare's current board from among its current members, and eight Class B directors. As vacancies occur, the Class A directors will select replacement directors, whose appointment will be subject to approval by Stanford.

Class B directors will be selected by Stanford from a slate of candidates submitted by a nominating committee appointed by Stanford.

The agreement also gives the Charitable Foundation an oversight responsibility to protect the community's interests by monitoring Stanford's satisfaction of certain commitments under the Affiliation Agreement for a period of five years. The amended governing documents of the Charitable Foundation will give members the opportunity to elect the Charitable Foundation's board of directors from among nominees approved by the new VCHS Board.

For its part, Stanford will provide fundraising expertise and a charitable contribution of $3 million to the foundation. VCHS will continue to provide meeting space necessary for the foundation to carry on its fundraising functions. The sole purpose of the foundation going forward will be to support VCHS and further the charitable purposes it serves.

The ValleyCare Medical Foundation is a separate nonprofit corporation of which VCHS is the sole member. The foundation contracts with ValleyCare Physician Associates to provide medical services in the foundation's clinics.

The new affiliation with Stanford will not initially affect this structure, with the medical staff remaining a part of ValleyCare. However, over time the ValleyCare Medical Foundation operations may be combined into Stanford's Bay Area physician network.

Stanford leadership also will assist and provide support to ValleyCare and its medical staff in clinical care currently offered at the ValleyCare hospital and medical facilities in Pleasanton and Livermore as well as support the development and operation of a broad geographic network of health care providers and facilities in collaboration with Stanford Health Care and the Stanford University and its School of Medicine.

This effort will further the charitable, scientific and educational purposes of the university as well as develop, sponsor and advance services and programs that address the physical and mental needs of the community at large.