Virginia Commonwealth University's 698-bed Medical College of Virginia Hospitals in Richmond officially sheds its status as a state-run agency to become an independent hospital authority on July 1.
The boards of the university and the hospital approved an affiliation agreement earlier this month that ensures MCV, as it is known locally, will continue as an academic medical center.
Eugene P. Trani, president of the university and chairman of the hospital's board, said the new status should give MCV the flexibility it needs to make capital outlays, set up its own employee benefit programs and enter joint ventures and managed-care and other insurance contracts without waiting months or even years for state officials to sign off on the deals.
Trani described the Richmond market as "bifurcated" between four not-for-profit hospitals controlled by Marriottsville, Md.-based Bon Secours Health System and five for-profits operated by Nashville-based Columbia/HCA Healthcare Corp.
Trani said the pressure to secure managed-care and other commercial insurance contracts pushed MCV to align in January with Bon Secours Richmond Health System in one of its first major moves since securing the state's approval last year to become an authority.
That leaves for-profit 127-bed HealthSouth Medical Center, one of the few acute-care hospitals operated by Birmingham, Ala.-based HealthSouth Corp., as one of only two nonaligned hospitals in the city. A spokeswoman for HealthSouth said the hospital has no plans to merge with another system in the market but is looking at various shared services arrangements. The for-profit, 180-bed Metropolitan Hospital, owned by Houston-based Paracelsus Corp., also remains independent. A spokeswoman said the hospital has committed to a $5 million renovation and has no plans to merge or sell.
Under their deal, MCV and Bon Secours agreed to grant each other preferential status in developing joint ventures in central Virginia for five years.
"An affiliation with Bon Secours means that if anyone excludes us from a contract, they're excluding the whole not-for-profit sector," Trani said.
Trani said MCV and Bon Secours recently joined with 287-bed Southside Regional Medical Center in Petersburg to open in January an ambulatory surgery center to serve residents in southern Chesterfield County. They are also negotiating joint managed-care contracts and establishing joint residency programs, he said.
At the same time, Trani said MCV is going forward with an earlier agreement with Columbia. MCV and Columbia are building a replacement facility for Richmond Eye and Ear Hospital that is expected to be completed in the next 18 months.
"We don't really view Columbia as a competitor," he said. "We're all pressed in a difficult managed-care environment. The key for us is not to be excluded from commercial insurance contracts."