Ballad Health has worked feverishly to consolidate services across its rural Southwest Virginia hospitals, with Norton Community Hospital emerging as the remaining inpatient hospital in its town.
Now, the not-for-profit health system has bought out a minority owner's 49.9% stake in that hospital. The change means all of the hospital's revenue now flows to Johnson City, Tenn.-based Ballad, up from about half before the deal.
Ballad, formed through a February 2018 merger, is working to aggressively consolidate services across its three Southwest Virginia hospitals: Norton Community Hospital and Mountain View Hospital, about two miles from one another in Norton, and Lonesome Pine Hospital about 20 minutes away in Big Stone Gap. Ballad is now the sole owner of all three hospitals.
Ballad received approval from Virginia regulators to close Mountain View's emergency department and discontinue surgeries, inpatient and intensive-care services there. The health system characterizes the changes as moving and combining those services at the other hospitals.
"Ballad basically told us, 'Things cannot continue as status quo,' because the majority of the volume is coming to Norton Community Hospital and they're only getting a portion of that revenue," said Charles "Jibber" Ward, former chairman of Norton Community Hospital.
Proceeds from the sale are going to the newly-formed Rapha Foundation, a not-for-profit organization that will fund population health initiatives across Southwest Virginia.
"This opens a whole new door of opportunity for us to go outside the four walls of the hospital and do things we were not able to do as the board of the hospital," said Ward, who now chairs Rapha's board.
The former owner, Community Healthcare Foundation, Inc., agreed to sell its 49.9% minority stake in the hospital to Ballad in a deal that took effect Sept. 30. That group's board will now become the governing body for the Rapha Foundation, a name that means "healing" in Hebrew.
Freddie Mullins, an attorney for the Rapha Foundation, said the deal wasn't made public earlier because the board had not yet chosen an executive director for the foundation. Mark Vanover, former assistant vice president for Dickenson Community Hospital, will assume that role on Dec. 1. Under his leadership, the foundation expects to announce its first major gift before the year's end.
Ballad said in a statement it's grateful for the years of partnership with the Community Healthcare Foundation and looks forward to continuing to work with the new foundation.
"By unlocking their minority equity in the hospitals, the Rapha Foundation now has an exciting opportunity to join Ballad Health in directly investing in solutions to tackle the root causes of poor health in the area," the statement said. "We wish Mark all the best in his new leadership role and thank him for his years of leadership at Dickenson Community Hospital."
The Community Healthcare Foundation had been a 49.9% owner of the hospital since 2007 when it entered an affiliation agreement with one of Ballad's predecessor systems, Mountain States Health Alliance. Mountain States had a 50.1% share, which later became Ballad's.
Mullins said Ballad paid a portion of the sale price up front and has committed to paying the remainder over the next five years.
Ballad has been the subject of considerable criticism and a long-running protest outside one of its main hospitals over controversial changes the health system has made since its formation. Among other changes, Ballad stripped its hospital in Kingsport, Tenn. of its neonatal intensive care unit and downgraded that hospital's trauma center.