The only question left about Kentucky's new Univa Health Network's hospital roster is: Who's not in the network?
According to the latest data from the American Hospital Association, Kentucky has just 122 hospitals, including acute-care and specialty facilities, and 90 of them, or virtually every not-for-profit in the state, are part of the network. That doesn't include four Indiana hospitals bordering Kentucky.
And it's all perfectly legal, said William Zavaglia, Univa's president and chief executive officer.
After a brief investigation, the Federal Trade Commission cleared the network of any antitrust problems, and the network's founding hospital systems incorporated Univa as a not-for-profit joint venture in March 1995. Its application for designation as a tax-exempt organization from the Internal Revenue Service is pending.
If Univa succeeds, it could serve as a model for not-for-profit hospitals in other states that want to affiliate under a statewide umbrella and lock out competing for-profit hospitals.
Univa began as a statewide integrated delivery system first proposed by Alliant Health System and Baptist Healthcare System, both based in Louisville, Ky., in September 1994. Within four months, Sisters of Charity of Nazareth (Ky.) Health System and St. Elizabeth Medical Center in Covington, Ky., joined the proposed venture. The four systems combined owned 16 hospitals in the state.
The roster grew to 25 in May 1995, when the Kentucky Health Network joined the other four in the venture. KHN is a partnership among Alliant and nine individual hospitals.
After adding a few Indiana border hospitals, the balance of Univa's 94-hospital roster came from management, affiliation or service contracts between the five sponsoring groups -Alliant, Baptist, Sisters of Charity, St. Elizabeth and KHN-and other facilities throughout Kentucky.
The arrangement isn't anti-competitive for several reasons, according to Zavaglia. Univa hospitals are geographically dispersed and don't control or dominate any one market, he said. And the hospitals don't share price information with each other through Univa, he said. Each hospital provides individual price data to Univa, which uses a third-party to develop a fee schedule it uses to negotiate service contracts on behalf of its hospitals, he said.
Univa initially had two separate boards: one to oversee the hospital network serving Louisville and the other to oversee the statewide network. However, the use of two boards became cumbersome, Zavaglia said; so they were combined in January. The consolidation resulted in the elimination of the posts of president and CEO of the Louisville network that were held by William Jessee, M.D., former senior executive at the Joint Commission on Accreditation of Healthcare Organizations. Jessee now is working for the American Medical Association (June 3, p. 16).
Univa's annual operating budget is $4.5 million, and the company employs about 25 people.
Univa has yet to sign any service contracts on behalf of its hospital members, but the company is bidding on several that would be effective for the contract year starting July 1, Zavaglia said.