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Merger proposed for CRH
The University of Virginia Medical Center could assume a 49-percent interest in Culpeper Regional Hospital, if a proposal between the two goes through.
That could mean Culpeper receives some of the resources and expertise from UVA’s billion-dollar operation; something that many officials say they'll need in keeping Culpeper’s head above water. In the coming years, CRH must deal with rising insurance costs, $40 million in needed upgrades and a growing senior population that will demand more services.
In exchange, UVA could ensure that more referrals from Culpeper head to its hospitals, and expand some of its programs. It would also claim a 49 percent representation on the hospital’s Board of Trustees. But when all is said and done, even the size of that board could change.
Hospital trustees call it the biggest decision CRH has made since opening in 1960.
“Quite frankly, there wasn’t a lot of discussion," President and CEO of Culpeper Regional Hospital Lee Kirk said. "This is the structure of the partnership we’ve had in the past. UVA respects the fact that we want to remain an independent community hospital.”
Negotiations had been ongoing with UVA since January. Said Kirk. But hospital officials have spent the past five years exploring partnerships with another institution, including the University of Mary Washington.
With insurance costs rising and demand for services set to increase, hospital officials say the partnership must happen.
In the coming years, officials must move ahead with $40 million worth of new projects, including more patient beds, expanding the emergency department and building a new MRI center. They further anticipate a need for 33 additional doctors over the next three years.
And many in the region expect a dramatic rise in senior care within the next few years. Buildings such as the Powell Wellness Center were built with that need in mind, said Kirk.
And such improvements are all the more difficult for Culpeper Regional, which scored $65 million in revenue last year. However, expenses cost nearly that same amount, according to the hospital's Community Benefit Report. In 2007, CRH had only $447,000 in surplus funds.
"That ($65 million in revenue) sounds very large to us, but in this business world, it’s very small," Kirk said. "The economics of health care and hospital care is very difficult. We’ve been fortunate to have positive margins, but they’ve been very small."
Making matters worse have been a steady increase in the number of charity cases that CRH handles. In 2007, about $1.7 million was written off as charity. Another $78 million was left uncovered by insurance, Medicare or Medicaid.
"Insurance is becoming increasingly more expensive, and that makes it harder to pay deductibles," Hospital representative BJ Harrington said. "And there's more people that don’t have insurance at all. The working poor are increasingly not covered (by insurance)."
Partnering with UVA could mean that those $40 million in projects finally move forward. And UVA's graduating class could mean a quick fix for any staffing needs.
"We're not trying to fix up problems," Ed Howell, VP and CEO of the UVAMC cautioned. "CRH is a great place. This partnership allows us to take it to the next level."
But how much UVA will pump into Culpeper remains uncertain, especially since Culpeper Regional’s assets haven’t been determined.
The CRH board voted unanimously to pursue the partnership, and signed a letter pf intent that agrees to negotiations. If approved, UVA would assume its 49 percent on Jan. 1. Howell expected to finish negotiations by Sept. 1.
Those talks will continue as an independent agency calculates the hospital's assets, which range anywhere from $50 to $80 million. Howell predicted that process would end within two to three months.
Under the conditions so far, Culpeper Regional would maintain control of its day-to-day operations. The proposal entails no job cuts. So far, few anticipate any problems with the negotiations.
Harrington pointed to Culpeper Regional's existing partnerships with UVA. In 1997, UVA assumed 49 percent of Culpeper Medical Associates, the that employs all of the family practice physicians and pediatricians in the area.
"It's fair to characterize as an expansion of a partnership we already have," Harrington said.
You may contact Jason Peck at 825-9882 or e-mail jpeck@timespapers.com
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