The Seton Healthcare Family, which operates 15 hospitals and clinics in Texas including University Medical Center Brackenridge, plans to spend $250 million on a new hospital that will include Austin’s first medical school.

Seton negotiated a 100-year lease with Austin’s Central Health to build the modernized facility, which will potentially improve health care in Austin and replace the teaching hospital UMCB with a local medical school, according to the Austin American-Statesman.

No legally binding contract exists at this point, although the Central Health board signed a letter of intent to establish the medical school on Saturday. This letter indicates that the future medical program will be affiliated with UT and will expand upon the services offered by UMCB, according to the Statesman.

Seton is planning to fund the new hospital with resources from its parent company, Ascension Health, along with donations. Officials expect the $250 million to cover all costs of new equipment and construction, with an estimated three years needed to complete the hospital, according to the Statesman.

Central Health could receive an extra $390 million over five years from the federal government for improving local health care and by increasing the number of low-income patients as a result of the new hospital. The Patient Protection and Affordable Care Act, signed into law in 2010, includes a Medicaid overhaul that could increase the federal funding states receive, which Central Health has pledged to Seton as part of the new hospital agreement, according to the Statesman.