UPDATED: Martha Jefferson to merge with Sentara

Martha Jefferson Hospital intends to merge with Norfolk-based Sentara Healthcare, a historic union for the 107-year-old Charlottesville hospital.

The larger nonprofit health system already has eight hospitals around the state and has worked in some capacity with Martha Jefferson for more than 10 years, hospital officials said Wednesday. Officials said the merger would allow Martha Jefferson to provide better care and acquire the latest technology.

“We believe this will make Martha Jefferson Hospital an even better community hospital,” said Jim Haden, president and CEO of Martha Jefferson. “They become us, we become them.”

No price tag has been attached to the merger, and hospital officials said there would be no layoffs as a result. The completion of the merger is expected to take around six months.

The hospital’s Board of Directors began looking at possibly joining with another system in 2008.

“While Martha Jefferson on its own is in great shape, there were other sort of technology-based resources that we knew could take us to that next level. And by partnering with someone, it would enable us to get there faster and better than we would do on our own,” said Peter Brooks, a hospital board member.

Haden said apart from having resources and capabilities that could advance its quality of care, Sentara offers a cultural fit with Martha Jefferson, demonstrated by its network of community hospitals and its nonprofit status.

The move is indicative of a recent trend in the country’s health care system, in which providers have been consolidating to make care more efficient and cost-effective.

“There’s been a lot of consolidation going on in Virginia and around the country for years,” said Laurens Sartoris, president of the Virginia Hospital & Healthcare Association. Sartoris said that in health care, as in other sectors, consolidation is a matter of spreading costs.

Sentara got its start in 1888 as a Retreat for the Sick in Norfolk, and it has been expanding its network in recent years. Last year, it merged with a hospital in Woodbridge, and in July it announced a pending merger with Rockingham Memorial Hospital near Harrisonburg. Martha Jefferson will be its 10th hospital.

“A lot of them are seeking partners,” David Bernd, the CEO of Sentara, said of smaller hospitals. In 2009, Sentara hospitals had 20,000 employees, compared with Martha Jefferson’s 1,800, and net assets of $987 million.

The Charlottesville hospital was founded in 1903 and it opened its doors in 1904. Bernd, an Albemarle High School graduate, described Martha Jefferson as a “very good institution” with excellent management and medical personnel.

“I think it’s going to be a good partnership,” he said.

For the fiscal year ending Sept. 30, 2009, Martha Jefferson reported $130 million in net assets. It will retain its name and a local board will continue governance over local issues, officials said.

The hospital last week completed the sale of more than 8 acres of its existing property, selling it to a group of investors for $6.5 million. Charlottesville-based Octagon Partners will oversee the redevelopment of Martha Jefferson’s existing main campus after it moves to its new hospital on Pantops next year.

Bernd said partnering with a larger organization will allow the community hospital to better work through the complexities of the new health care legislation passed earlier this year. Those involved with the two nonprofits and in the industry agree that the new law will encourage the bundling of services and consolidation as a way to cut costs.

The rapidly changing environment for administering health care was very much a part of the hospital’s thinking on its future course, Brooks said.

“In the near term, it’s going to be wrenching for all of us,” he said of health care changes. “But the long term is, I think, a very exciting opportunity, but it’s going to be an exciting opportunity for health care systems that are in the position to capture that opportunity.”

In a statement, R. Edward Howell, the vice president and CEO of the University of Virginia Medical Center, said, “We would have preferred that Martha Jefferson partnered within the community, however, we wish only the best for Martha Jefferson and all its employees.”

The UVa Medical Center has a partnership with the Culpeper Regional Hospital, and university officials said they would always be open to collaboration opportunities, especially when they benefit those who live and work in Central Virginia.