THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, January 29, 1995 TAG: 9501280186
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
LENGTH: Long : 114 lines
David Bernd is excited.
At least, he says he's excited, although his manner and his voice are impassive as he leans back in his chair in a Sentara headquarters conference room.
``We're talking about a brave new world of health care which emphasizes primary care and prevention rather than treatment,'' says Bernd, Sentara's president and chief operating officer.
Bernd has been tapped to take over Sentara Health System in the spring, when the company's chief executive officer and guiding force, Glenn R. Mitchell, retires. He also recently took over as chairman of the Virginia Hospital Association.
Bernd is one of the people charting the future of health care, and, like many in the business, he envisions a system radically different from what we have now. Here is an excerpt from an interview with staff medical reporter Marie Joyce:
Q: Conventional wisdom says hospitals are losing strategic importance for health care companies. Yet your company owns four hospitals. Is that too much for a company your size?
A: We've been able to diversify outside of the inpatient segment of the industry, and that has helped us to maintain the hospitals.
Q: So the other branches help keep the hospitals going?
A: Right. The outpatient business, the insurance business, referrals back and forth, the integration of physicians all work together.
Sentara Health System was established for two major reasons. The major one was to support the mission of Norfolk General Hospital. The other is the support of Eastern Virginia Medical School.
That was the major reason why we undertook (diversification), to protect those missions.
Q: Have some people in the business overstated the burden of running hospitals?
A: Yeah.
There will always be hospitals. They may end up being emergency departments with 100 percent intensive-care units in the next century.
Q: What should a hospital be doing right now to remain profitable?
A: The first thing a hospital needs to do is bring physicians into management. You need their expertise to help you streamline your services. The second thing is to emphasize being customer-friendly to outpatients.
Q: Let's talk about the health of Sentara's hospitals. According to a recent efficiency and productivity report by the state, Sentara's hospitals are among the most efficient in the area - except Bayside in Virginia Beach. What is the problem at Bayside?
A: We acquired it (in 1991) from Humana, a for-profit, stock company. We took it over with the charges in place. We inherited a very high price structure. In four years, Sentara has not increased those charges, (but) we weren't able to reduce the charges very much. The goal (is) to bring Bayside prices in line with the other institutions.
Q: Sentara went to a great deal of effort to get a hospital in Virginia Beach. You tried to build one at first, then you purchased Bayside. Why did you need a hospital there?
A: Sentara needed to purchase a hospital in Virginia Beach because we didn't have access to hospital beds for our managed-care (patients).
Q: Tidewater Health Care, which owns Virginia Beach General, used to own part of your Optima HMO. Why couldn't you have sent your patients to Beach General?
A: They (Tidewater) withdrew ownership. We didn't ask them to do it. (Then) we didn't have access to hospital beds in Virginia Beach.
Q: Some companies have satisfied their needs by affiliating with hospitals, rather than owning them.
A: We have a strong partnership with Maryview (Medical Center) and Children's Hospital (of The King's Daughters) and Mary Immaculate and Chesapeake General. Acquiring hospitals and building hospital facilities is no longer part of the strategic plan of most integrated health care systems.
Q: You've said that, and yet it seems that going in and purchasing a hospital in Virginia Beach would fly in the face of that. Why did you pursue that, as opposed to continuing the relationship with Beach General?
A: I guess probably for the same reason they withdrew their ownership. Everybody was concerned about the future and wanted to control their own destiny, I guess. We continually are approached by various hospitals about the possibility of affiliation, and we've told them that our strategic initiative has changed, and we're not as interested in that. It doesn't mean it's not going to happen, but it's not one of our major focuses.
Q: What about Chesapeake General? (Efforts to affiliate with Chesapeake several years ago fell through.) If the citizens of Chesapeake said, ``We want to have a more formal affiliation with Sentara,'' is it something Sentara would still be interested in?
A: Yes. We're still interested. We feel Chesapeake is a very strong partner of ours now as an independent institution. If their needs changed, we'd sit down with them and see if we can help them to meet their needs.
Q: Let's talk about the insurance side. Who is your most important local competitor?
A: Blue Cross Blue Shield. It's an excellent company with very good products.
Q: Right now, they have a much smaller group of people in managed care, but they cover more people in a standard plan that they could move over.
A: Absolutely. That's where they're headed.
Q: What if national, for-profit health care companies became more aggressive in this market? Do you think being locally based would give you an edge?
A: Only if we provide a high-quality product at a low price and meet the community's needs. If we do those three things, our local presence should help.
Q: Are you planning to move more aggressively into other markets? Sentara Mental Health Management recently won a statewide contract to provide psychiatric services to state workers.
A: No. We see ourselves as basically a Hampton Roads company with a regional mission. If we were to expand outside Hampton Roads, it might be in the realm of insurance products. ILLUSTRATION: LAWRENCE JACKSON/Staff
KEYWORDS: INTERVIEW by CNB