THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Saturday, January 18, 1997 TAG: 9701180353
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MARIE JOYCE and DEBRA GORDON, STAFF WRITERS
LENGTH: 111 lines
The parent company of Virginia Beach General Hospital is exploring an alliance with Sentara Health System or one other local health care company, presumably Bon Secours Health System, officials from several companies said Friday.
Virginia Beach General is owned by Tidewater Health Care, a local company that also owns a health maintenance organization, a doctors practice, an outpatient surgery center and other businesses. No agreement has been reached. But if a deal occurs, it could involve any or all of the company's holdings, including Beach General, a 274-bed hospital with a $120 million annual operating budget.
Douglas L. Johnson, president of Tidewater Health Care, said his company is talking to two local, non-profit health systems but no details have been worked out. The shape of a potential arrangement could range from a loose affiliation, which would involve collaborationon a few projects or businesses, to a combining of some company holdings.
He pointed out that the company already has joined with other health care companies in a variety of ventures. ``Tidewater Health Care. . . continues to look for opportunities for affiliation,'' he said.
He said the talks are driven by ``the impact of local health care organization and the advent of managed care.''
If an alliance happens, it would move Hampton Roads closer to the day when, health care leaders predict, all hospitals and many other health care businesses will be under the wing of two or three competing health systems.
In the increasingly competitive health care market, it's very difficult for small companies to go it alone, health care leaders say. Hampton Roads has seen many loose affiliations and outright mergers form over the past several years.
Over the last year, for example, Sentara formed a partnership with Williamsburg Community Hospital. Bon Secours bought DePaul Medical Center in Norfolk, and Portsmouth General Hospital. Portsmouth General, which was purchased from Tidewater Health Care, will be shut down.
More recently, rumors have been circulating that Tidewater Health Care planned to unload Beach General, located on First Colonial Road, as it did Portsmouth General.
Johnson said the rumor is false.
``There is no sale,'' he said. ``My board would never, never put up with that.''
Johnson also denied a rumor that the company is talking with a non-local, for-profit chain like giant Columbia/HCA Healthcare Corp. He said the company would prefer to work with non-profit companies. Sentara and Bon Secours are non-profit, meaning they plow revenueback into their health care services, rather than sharing it with investors.
Sentara officials confirmed that they are talking to Tidewater Health Care. Sentara owns rival Sentara Bayside Hospital, a 158-bed hospital also in Virginia Beach.
``This is really a phenomenon that's going on in the health care industry today,'' said spokeswoman Deborah Aiken Myers. ``Everybody's talking with everybody.''
Sentara also owns hospitals Sentara Norfolk General; Sentara Leigh in Norfolk; and Sentara Hampton General; as well as two HMOs, doctors practices and other health care services.
Bon Secours officials said they are talking with local hospitals and other health care businesses about closer affiliations, but declined to identify any.
``It's business as usual for us to talk with everyone in this area,'' said spokeswoman Louise B. Eidson.
Bon Secours, a company affiliated with the Roman Catholic Church, owns DePaul; Maryview Medical Center in Portsmouth; and a number of other hospitals in Virginia and other states.
It might prove tricky for Tidewater Health Care to square the deal with its other partners. Tidewater shares ownership of its health maintenance organization with Trigon Blue Cross Blue Shield of Richmond, a competitor of Sentara's HMOs.
``All the pieces that have gone before would have to be meshed,'' Johnson said.
Tidewater Health Care has been a one-hospital company since it sold Portsmouth General in May.
It makes sense for them to look for partners, said Paul M. Boynton. Boynton is executive director of the Eastern Virginia Health Systems Agency, a state-appointed group that monitors hospital expansion.
``They're clearly, at some point in time, going to have to do that,'' he said.
Profits are shrinking for hospitals around the country, as managed care insurance lowers reimbursement for services. Boynton said that hospitals allied with large companies have an economic advantage, since they can share costs and bid competitively for supplies and services. Then they use those savings to offer good prices to HMOs, guaranteeing that their hospitals get enough business. ILLUSTRATION: Color photo
Douglas L. Johnson
Graphic
TIDEWATER HEALTH CARE
Virginia Beach General Hospital is a owned by Tidewater Health
Care, a non-profit corporation. The 274-bed hospital has 1,557
employees.
Tidewater Health Care has interests in many other health care
ventures, including Healthkeepers by Priority, an 80,000-member HMO
owned with Trigon Blue Cross Blue Shield.
Other ventures include:
Virginia Health Network, a preferred provider organization owned
with other hospitals.
The Virginia Beach ambulatory surgery center.
Tidewater Medical Group, a doctors practice.
Physician Services of Hampton Roads, a telephone and paging
service.
Access Home Care, which provides medical equipment and services.
Windermere at Virginia Beach, a 60-bed nursing home.
KEYWORDS: TIDEWATER HEALTH CARE