Another university hospital has chosen Option C: Staying independent.
This time it's 804-bed Medical College of Virginia Hospitals in Richmond, known locally as MCV, that has chosen to go it alone rather than sell to a for-profit chain or merge with another not-for-profit system.
After flirting with a Richmond network of not-for-profit hospitals and considering a joint-venture deal with for-profit Columbia/HCA Healthcare Corp., which owns three area hospitals, MCV, owned by Virginia Commonwealth University, is going it alone.
The hospital sought and obtained special state legislation that allows it to break from the university and become its own hospital authority.
Legislation on behalf of the hospital was introduced in January and was passed in March. After several technical amendments to the bill were made, Virginia Gov. George Allen signed the measure into law on May 6, and MCV becomes its own hospital authority on July 1.
The law creates the Medical College of Virginia Hospitals Authority, which will take over the operations of the facility. A 16-member public board, appointed by the governor, will run the new authority. Virginia Commonwealth University will have seven seats on the board, including the president of the university and the dean of the university's medical school.
All appointments to the new authority are expected to be made by the end of June.
The law essentially frees the hospital from the bureaucratic red tape that comes with being a facility operated by a state university, said Don Gehring, MCV's vice president for external relations.
"One way to make ourselves more attractive to potential partners was to get out from under state regulation," he said. "That was the real impetus."
Under the new authority law, MCV now has the power to issue its own revenue bonds, acquire property by the right of eminent domain, create new not-for-profit corporations and, perhaps most importantly, enter into joint ventures with other corporations. It also can set its own rules regarding physician staff privileges, employment policies and indigent care.
In the fiscal year ended June 30, 1994, MCV earned just $1.3 million on total revenues of about $382.8 million, according to the latest available data from the Virginia Health Services Cost Review Council.
"We have a lot of irons in the fire right now," Gehring said. "We think the best way to survive is to stay independent and not give up control but create as many networks as possible."
Gehring confirmed that MCV is "in discussions" with Columbia and Bon Secours-Richmond Health Corp., which owns or is affiliated with five of the Richmond market's 13 hospitals. Since 1993, MCV has considered joining the Bon Secours network or forming a joint venture with Columbia (April 22, p. 40), but the new talks focus on joint contracting rather than sharing control.
A Bon Secours spokesman said the Roman Catholic system supported MCV's authority legislation and agreed that the hospital's new independent status makes it an attractive contracting partner. But he declined to offer any specifics regarding talks between the two parties.
At deadline, a spokesman for Columbia's Richmond hospitals didn't return phone calls.
MCV is the latest university hospital to forgo selling out to a for-profit chain or merging with a not-for-profit system. Others that have opted to stay independent include the University of Alabama Hospital in Birmingham and University Medical Center in Lubbock, Texas (March 25, p. 100). And some are taking Option C a bit further. University of Cincinnati Hospital, for example, is considering converting to a private not-for-profit corporation (May 6, p. 18).