Historic deal: Martha Jefferson to merge with Sentara
Martha Jefferson Hospital announced today it will merge with Sentara, a regional health care system based out of the Hampton Roads area.
Like Martha Jefferson, Sentara is a not-for-profit. Unlike Martha Jefferson, Sentara already has nine hospitals, including the recently purchased Potomac Hospital in Woodbridge and the July-announced merger with Rockingham Memorial Hospital in Harrisonburg.
"They certainly have been on a tear acquiring hospitals," says Tom Brown, an attorney with McGuireWoods specializing in healthcare mergers.
Especially attractive to Martha Jefferson, which has revenues of $230 million, is that Sentara, with earnings of $3 billion, has the assets to capitalize the Charlottesville hospital.
Martha Jefferson President Jim Haden says the final numbers for a cash infusion from Sentara will be worked out over the next few months, but he stresses that it was the cultural fit, not the size of Sentara's bank account, that was most appealing in their union.
"Our goal has always to become a better hospital," he says, especially in maintaining quality and safety. And to get there, Martha Jefferson needs additional help, he adds.
For instance, Sentera is ranked number one in the country for its integrated systems, says Haden. And the move to electronic medical records is looming.
"It's not a matter of more hardware," says nephrologist and board member Kevin McConnell. "but where you use the data." That could mean pinpointing a cluster of flu outbreaks, or cameras in patients' homes, a high-tech revival of the near-obsolete house call.
"How do we work out the system so that we can take care of patients in their homes?" asks McConnell, who acknowledges that the desire to provide preventative care and keep people out of the hospital offers a "cognitive dissonance" coming from a hospital.
Martha Jefferson's Board of Directors began looking for a merger in 2008 and considered five different healthcare systems before settling on Sentara–- without a request for proposal.
"Three years ago I thought it was a crazy idea," says Dr. John Ligush, head of the Martha Jefferson medical staff. "Now I wish we'd done it three years ago."
According to the release, Sentara has never had a layoff and has no plans for layoffs here. Martha Jefferson Hospital will retain its name and a board of directors to handle local issues. And donations to Martha Jefferson will stay in the community, assures Haden.
Approval of the deal will take about six months.
With healthcare reform, more hospital mergers are likely. "What's happening is very common," says attorney Brown. "Hospitals account for one of the least consolidated industries in the country."
For Martha Jefferson, the deal represents the end of an era. Founded in 1903 as the Martha Jefferson Sanatorium and taking a site near Locust Avenue the following year, it has recently been constructing a new home on Pantops Mountain.
In 2007, several years after announcing that it would leave the city for an 88-acre site at Peter Jefferson Place office park, Martha Jefferson began inviting proposals from developers and revealed just a week ago that it was selling its 8-acre Locust Avenue site for $6.5 million.
The seemingly low price for prime downtown real estate has raised some eyebrows. "That was the best bid we received," says Haden. And time was a factor with the impending move to Peter Jefferson Place next year. "We didn't want to leave an empty building," he says.
The not-as-high-as-expected sale of the property and the merger with Sentara have prompted some speculation that Martha Jefferson is facing financial difficulties.
Not true, says Peter Brooks, a Martha Jefferson board member who serves on its finance committee. "Martha Jefferson is in a very strong position financially," he says.
Even with building a new $275 million hospital, he says costs have been below projections. Brooks, too, has heard talk that Martha Jefferson is hurting. "It just plain upsets me because it's just not true," he declares.
Sentara was founded in 1888 as the Retreat for the Sick in Norfolk. It now provides care at more than 100 sites in Virginia and North Carolina, and its health plan, Optima Health, has 420,000 members.
And according to Martha Jefferson's McConnell, Sentera's girth will serve the local hospital well. "Sentara's size allows them to be heard," he says. "The government is interested in hearing from health systems about what is working and what isn't. The larger you are, the better chance to be heard."