THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, October 14, 1995 TAG: 9510140323
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: Medium: 67 lines
The Allen administration is considering selling the Medical College of Virginia and the University of Virginia's hospitals, the Richmond Times-Dispatch reported early today.
Selling one or both of the state's two public hospitals - whose estimated combined worth tops $500 million - is the most controversial of three options being considered by state officials as part of a hospital privatization study sought by the administration and General Assembly.
``We're examining the options and looking at the pros and cons in the framework of what's in the best interest of the taxpayers, the employees of the hospitals and the customers they serve,'' said Robert Lauterberg, director of the state Department of Planning and Budget.
A study of the possibilities has been completed and is to be sent to Gov. George F. Allen and the chairmen of the General Assembly's money committees by Nov. 1.
Education Secretary Beverly H. Sgro said no decision has been made on whether privatization legislation will be put before the General Assembly session in January.
The hospitals in Charlottesville and Richmond treat most of Virginia's poor and most seriously ill patients, and train the bulk of the state's doctors. The hospitals face a widening gap between state allocations and the real costs of providing indigent care and medical education.
The study looked at three proposals: selling the hospitals, creating a quasi-governmental authority to take over the hospitals' management, or creating tax-exempt private foundations - the work of which would be largely closed to public scrutiny - to run the facilities.
Under each of the three privatization plans, several thousand non-faculty employees at the two hospitals would lose their state employee status, university and administration officials said. This would include nurses, technicians and office workers, but not physicians.
Any of the three options would have to be agreed to not only by the General Assembly but also by investors who hold millions of dollars in bonds on the two facilities, officials said.
Officials from U.Va. and Virginia Commonwealth University, of which MCV is a part, overwhelmingly favor the authority option, while staunchly opposing the sale of their hospitals.
``I can't think of any good reasons to sell the hospital to someone from out of state coming in to take over one of the crown jewels of the commonwealth,'' a U.Va. official, who spoke on the condition of anonymity, told the newspaper.
Other U.Va. and VCU officials wonder who would get the proceeds from the sale - the state or the universities that have largely paid for their construction through patient revenue.
U.Va. President John T. Casteen III said ownership of the hospitals ``has always been contested in Virginia. The state statute leaves the matter somewhat vague. It's a gray area in the law.''
Casteen said he would wait to see what the final recommendation was before he commented further.
Allen spokesman Ken Stroupe said the governor's recommendations will come only after discussions with the school presidents and school governing board members.
``If legislation will improve the situation, we want to look at that as a goal for next year,'' Stroupe said. by CNB