Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)        Effective as of December 15, 2011, Vanguard Health Systems, Inc. (the “Company”) and Michael E. Duggan, a Senior Vice President – Operations of the Company who serves as Market President of the Company’s Detroit, Michigan market, executed a letter agreement that amended Mr. Duggan’s employment letter, dated as of September 18, 2009 (the “Duggan Agreement”), which agreement was assumed by the Company upon its acquisition of The Detroit Medical Center (“DMC”) effective January 1, 2011. The letter agreement extends the term of Mr. Duggan’s employment indefinitely as it was due to expire on January 4, 2012.

The letter agreement also acknowledges that there has been a Change of Control (as defined in the Duggan Agreement) and that, pursuant to the Duggan Agreement, Mr. Duggan is entitled to continue to receive his base salary as severance for a period of 12 months after the termination of his employment with the Company if he executes a release of claims upon such termination. Mr. Duggan’s current annual base salary is $974,500, which reflects the 2% pay cut on September 1, 2011 that Mr. Duggan and other senior management at DMC agreed to as part of a cost cutting initiative. The letter agreement provides that Mr. Duggan’s salary for 2012 will remain at $974,500 and that his salary for future calendar years will be determined at a later date. Further, Mr. Duggan will not receive a 401(k) contribution from the Company in 2012.

In addition, the Company agreed to make additional severance payments to Mr. Duggan as a retention incentive. Mr. Duggan will receive an additional three months of severance payments if he remains employed by the Company through June 30, 2012 or an additional six months of severance payments if he remains employed by the Company through December 31, 2012. Thus, pursuant to the Duggan Agreement, as amended by the letter agreement, Mr. Duggan would be entitled to continue to receive his base salary for 18 months if he remains employed by the Company through December 31, 2012.

Additionally, the parties agreed to amend the Duggan Agreement to provide that the Company would not reimburse Mr. Duggan for the costs of his COBRA health care employee benefits coverage, but instead would pay Mr. Duggan the total amount that the COBRA reimbursement would have been for the 12 month severance period, grossed up for taxes, in the form of a lump sum bonus.

Finally, Mr. Duggan and the Company agreed that each would provide at least 60 days prior written notice if either decides to terminate Mr. Duggan’s employment with the Company prior to December 31, 2012. Except as modified by the letter agreement,  the Duggan Agreement shall continue in full force and effect in accordance with its terms. The Duggan Agreement contains certain restrictive covenants, including an agreement not to compete with DMC for 18 months after his departure from the Company.

The foregoing summary of the letter agreement is a general description only, does not purport to be complete and is qualified in its entirety by the full text of the letter agreement, which is attached along with the Duggan Agreement as Exhibit 10.1 hereto and incorporated by reference herein.

Item 9.01

Financial Statements and Exhibits.

 
(d)        Exhibits.

            The exhibit filed as part of this Form 8-K is listed in the Exhibit Index that is             located at the end of this Form 8-K.