UVa hospital readies deal with Culpeper

The University of Virginia Medical Center plans to enter into a major partnership with Culpeper Regional Hospital, officials announced Wednesday.
The two health care providers have inked a “letter of intent” to share high-tech medical equipment, drug discounts, physicians and much more.
Under the deal, UVa would invest a “substantial” amount of capital in the Culpeper hospital, which serves Culpeper, Madison, Orange, Rappahannock, southern Fauquier and the surrounding region.
The agreement states that UVa would receive a 49 percent interest in Culpeper hospital and would be allocated seats on the Culpeper hospital’s governing board. Through those board representatives, UVa would gain influence on the hospital’s long-range strategic decisions.
Culpeper, a 70-bed hospital that employs roughly 600 workers, would remain a not-for-profit, independent institution and would keep its own governing board.
“The bottom line for us is that the partnership is about access to technology, access to expertise and access to capital,” said Lee Kirk, president and CEO of the Culpeper hospital.
Kirk said that Culpeper wanted to join a larger health system and that UVa was the “natural choice.”
“This positions Culpeper Regional Hospital for the future.”
Larry Fitzgerald, chief financial officer of the UVa Health System, said the agreement would mean that UVa Medical Center can further its mission of providing “quality health care, teaching and research.”
“UVa is attempting to extend its network to other communities to change the quality of care in those communities and improve the ability of residents to access our cutting-edge technology,” he said.
If the partnership is approved, Culpeper would have greater access to UVa’s equipment, such as the “gamma knife,” a radiosurgery tool that is used to treat brain tumors, vascular malformations and functional diseases. Culpeper would also gain access to discounts on drugs and equipment, as UVa is part of a group-purchasing consortium with other health systems. Culpeper could expect to see a 5 percent reduction in its pharmaceutical and equipment costs, Fitzgerald said.
For its part, UVa would gain additional capacity to train physicians — both residents and medical students— and possibly nurses, said R. Edward Howell, vice president and CEO of UVa Medical Center.
Fitzgerald said it is too early to detail UVa’s likely investment in Culpeper, though he acknowledged that it would certainly be in the millions. The Culpeper hospital’s total net asset value is between $80 million and $90 million, Fitzgerald said, but he added that UVa would not be paying 100 percent of its value. “This is a partnership,” he said.
Before the deal is finalized, UVa will spend between 90 and 120 days reviewing Culpeper’s finances and performing other due diligence. After that, both institutions governing boards must ratify the final agreement. Fitzgerald said he expects it to be in place by Jan. 1.
The deal would be an extension with UVa’s ongoing relationship with the Culpeper region. UVa already takes patients from the area and has a 49 percent stake in Culpeper Medical Associates, a primary care group of 29 physicians, physicians’ assistants and nurse practitioners.
“This really isn’t the beginning,” Howell said. “This is a continuation of the partnership that we’ve had. And we both feel that it’s been mutually beneficial.”
The partnership between UVa and Culpeper reflects a statewide and national trend of health care provider consolidation, said Laurens Sartoris, president of the Virginia Hospital and Healthcare Association.
“Regionalization of health care services is one of the watchwords in our field,” he said.
Increasingly, community hospitals such as Culpeper Regional Hospital are teaming up with larger institutions such as UVa Medical Center, he said. The smaller partner gets access to the larger institution’s resources, while the bigger institution can expand its presence and increase its training capacity, he said.