Sentara, Bon Secours join forces on Beach hospital

VIRGINIA BEACH

The area's two biggest health care systems announced Tue sday that they will collaborate rather than compete so they can build a bigger, more comprehensive hospital in the Princess Anne section of Virginia Beach.

Bon Secours Virginia and Sentara Healthcare are teaming to develop the 200-bed Sentara Princess Anne Hospital to open in late 2010. The most recent plan called for a 120-bed Sentara facility.

The full range of services to be offered by the new hospital are yet to be decided, but it would have an emergency room. The companies would work together on other health care services at each of their outpatient campuses, 3.4 miles apart in southern Virginia Beach.

Bon Secours will continue with its plan to build a new 124-bed hospital to replace its aging DePaul Medical Center in Norfolk and will reassess a proposal for a hospital in northern Suffolk.

The health systems have gone head-to-head during the past few years with proposals for state-approved "certificates of public need" in the fast-growing Virginia Beach area. Sentara had received approval from the deputy state health commissioner for the 120-bed facility in March, and Bon Secours' application for a 90-bed hospital on its nearby campus was denied.

Now Sentara will re craft its proposal to increase the size to 200 beds. Sentara's idea is to relocate 158 beds from Sentara Bayside Hospital and 42 from Bon Secours DePaul. Bon Secours' latest proposal for that facility is to shrink it from 238 beds to 124.

The hospital officials will submit a new plan to regional health officials in the next few weeks. They expect a public hearing early next year and hope to have a decision by the state health commissioner by summer or early fall.

Michael Kerner, chief executive officer for Bon Secours Hampton Roads, said the collaboration could free up resources for DePaul and Bon Secours Maryview Medical Center in Portsmouth.

The new Princess Anne hospital would cost between $205 million and $208 million to build, a savings of more than $90 million from the combined cost of the previous proposals for hospitals built by separate companies.

The two systems will continue to compete in areas outside the Princess Anne region, but officials said they are open to other joint ventures.

"I think the public is tired of the fights that happen in all aspects of life," Kerner said. "They want to see groups work together for better, more complete services, and that's what this does. It will be better for the community and better for the physicians to have a larger hospital with a breadth of services rather than two with fewer services."

Howard Kern, president and chief operating officer of Sentara Healthcare, said he believed the 120-bed proposal was too small.

Sentara w ould manage the hospital. An advisory panel would include members from each institution to provide oversight of quality and safety.

Each of the systems' outpatient surgical centers would continue to operate independently of one another. However, services such as diagnostic imaging and other ancillary services might be combined. Those details are still being sorted out.

Kerner said that when the regional Bon Secours system merged with the statewide one this summer, officials began having greater dialogue with Sentara representatives. The merger allowed Bon Secours to bring more to the table because of its statewide presence.

"We have always respected Sentara as a system, their quality of care and their ability to grow and flourish in the market," Kerner said.

Sentara's Kern said economic realities also played a role as hospitals recognized that state and federal funding could be cut.

Both systems felt that money spent wrangling over the certificates of public need, which were under appeal since the March decision, could be better spent.

A letter of intent was signed Tuesday, and a new proposal will be submitted to health officials within weeks. The first level of review will be conducted by the Eastern Virginia Health Systems Agency, which is expected to have a public hearing early next year.

"We don't know the details of the proposal, but it certainly sounds like it will be a good thing for the community," said Michael Byrnes, executive director of the health agency. "It's good to see this kind of collaboration. What we have to look at is the additional beds they're asking for. Because it's a joint venture, it'll help its chances. It's unique, I don't know that we have dealt with an application like this."

Michael Gentry, corporate vice president for Sentara's South Hampton Roads hospitals, said competition can be healthy for health systems, but some times it can be destructive, such as when there is overlap in services.

Norfolk Mayor Paul Fraim called the accord "wonderful news for the region." Fraim, who was born at DePaul, praised Kerner for the compromise.

"I know they've been working to strengthen their relationship with Sentara," he said. "This will serve everybody's interests."

Elizabeth Simpson, (757) 446-2635, elizabeth.simpson@pilotonline.com