The Strange Case of a Proposed Medical Merger in Hampton Roads

by James C. Sherlock

Hampton Roads

There was a story  Could EVMS merge with ODU, Sentara?” – in the Virginian Pilot this morning. It was well done and rendered a major public service.

A private study is “assessing” a regional merger of Sentara, ODU, EVMS and Norfolk State.  “Its task will be to provide recommendations to Gov. Ralph Northam on new ways the schools and hospital system could combine.” Not whether they should, or if there are any better options. 

The study is paid for by the hopeful merger candidates, so no one will be waiting breathlessly for the findings, except apparently the Governor.  

Northam has already announced that the results “may lead to significant changes for Hampton Roads’ “health care ecosystem,” which serves more than 1 million people.

The whole project reeks of Sentara self interest. The merger being studied will not be optimized for the good of the people of Hampton Roads. 

Sentara wants the state to award it because the merger otherwise cannot withstand federal antitrust review.

Key excerpts from the story

Private parties began exploring potential integrations of Eastern Virginia Medical School with Old Dominion University and Sentara Healthcare about 10 months before telling top leaders of the medical school.

Shortly after EVMS was informed, a consultant was hired to study the academic institution’s programs and finances. Its task will be to provide recommendations to Gov. Ralph Northam on new ways the schools and hospital system could combine.

Northam, who announced the project Aug. 5, said the results may lead to significant changes for Hampton Roads’ “health care ecosystem,” which serves more than 1 million people.

“This is an important effort to benefit Hampton Roads, and the Commonwealth as a whole,” Northam, a pediatric neurologist and EVMS graduate, said then.

The consultant, Manatt Health Strategies, is expected to deliver a report Nov. 15, ahead of the General Assembly session in January. Its advice could lead to new legislation or budget amendments for lawmakers to consider that seek to make the medical school more financially stable. …

Though it’s not clear how the process began and who the major players were, the contract with ReInvent, indicates Sentara is paying for most of it. The $285,000 fee will be covered jointly by the parties, with $185,000 from the private health system and $25,000 each from ReInvent, EVMS, ODU and the state. …

Virginia officials hope better partnerships could lead to improved health for the people of Hampton Roads. Eastern Virginia lags behind the state and nation in infant mortality, cancer, heart disease and diabetes. Most of these poor rankings reflect disparities with minority and low-income populations.

For instance, the infant death rate in Virginia and the United States was 5.8 out of 1,000 live births in 2017. But in Norfolk, the rate of Black baby deaths was 18.2.

Regarding prostate cancer, the national death rate was 19.5 out of 100,000 lives in 2015. But in Portsmouth, Black men died at a rate of 66.5 out of 100,000 — nearly four times that of white men in the city. …

EVMS seeks a new model as a means to get more capital and improve its academic reputation.

Sentara wants to better “align” EVMS’ medical group with its own.

Old Dominion wants to expand its health sciences and professional training programs.

And all of them see opportunities to capture more clinical research funding.

Emails between Morris Foster, Old Dominion vice president of research, and Manatt indicated they were also looking for ways to incorporate Norfolk State University in the mix. Study participants suggested that Norfolk State’s nursing, health care administration and social work programs could be areas to find collaboration.

Sentara increased its funding to EVMS in 2018 from $9 million to $26 million a year. For nearly 50 years, the company and medical school have partnered, with faculty and students working in its hospitals, including Sentara Norfolk General Hospital, a level 1 trauma center. 

Dr. Kurt Stauder, CEO of EVMS Medical Group, said the practice, like others, has taken a hit from unexpected costs and a loss of patient volume.

The group, composed of 150 physician-teachers and 40 other health professionals, supports the medical school and treats over 1,600 patients a day.

Takeaways

Sentara, a state-sponsored monopoly in healthcare delivery in Hampton Roads also owns Optima, the largest health insurer in Hampton Roads and the state’s largest by far Medicaid contractor. Yet it remains unsatisfied with the stranglehold it has in the areas surrounding its Norfolk Headquarters. Ever rapacious, Sentara already effectively controls EVMS but lusts after the EVMS Medical Group and its 1,600 patients per day to further tighten its grip. The ODU and Norfolk State partnerships are harder to understand, but Sentara wants ironclad control of every arrangement, and it likely considers these two schools pliable. It also knows quite well that the state must award what it wants, otherwise federal government anti-trust lawyers would sue to stop it.

The team that is trying to put this together, given an open field in Hampton Roads area from which to choose participants, took the least capable choices in each category — EVMS, Old Dominion and Norfolk State. An infinitely better set of alternatives jumps out at anyone who knows the field.  

  1. William and Mary serve as the University in this partnership; 
  2. Hampton University provide the nursing school and contribute its unique Hampton University Proton Therapy Institute http://www.hamptonproton.org capabilities. It hosts the largest free-standing facility of its kind in the world. Proton therapy is most popularly used in the treatment of head and neck, brain, and prostate cancer, but growing results from its application for other cancer types, including breast, lung, GI and more, have continued to prove positive. 
  3. University of Virginia Medical School take over EVMS as its Norfolk campus.  

The article author does not raise these options, but I have three simple questions for the Governor.  

  1. Is there some reason not to study options with a contractor not paid by the original group of participants?
  2. Why should the people of Hampton Roads settle for anything less?
  3. Why, when it is one of the most profitable hospital systems in the nation, has Sentara, officially a tax-exempt not-for-profit public charity, not used the medical community it controls, its dominance in Medicaid managed care and the fantastic profits it earns to correct the abysmal medical results among minorities within its monopoly zone?

Useful data about the options

Old Dominion University.  U.S. News and World Report Best Colleges National Universities, Ranked #258 among national universities.  Graduation rates 2019 students seeking a bachelors degree: 

  • Graduation Rate Within 4 Years 28.5 %; 
  • Graduation Rate Within 5 Years 46.8 %; 

College of William and Mary. U.S. News and World Report Best Colleges National Universities, Ranked #39 . Graduation rates 2019 students seeking a bachelor’s degree

  • Graduation Rate Within 4 Years 84.8 %
  • Graduation Rate Within 5 Years 89.2 %

Norfolk State University. U.S. News and World Report Regional Universities South, rank #80. Graduation rates 2019 students seeking a bachelor’s degree

  • Graduation Rate Within 4 Years 19.7 %
  • Graduation Rate Within 5 Years 33.4 %

Hampton University. U.S. News and World Report Best Colleges National Universities, Ranked #217, far ahead of ODU and Norfolk State. Graduation rates 2019 students seeking a bachelor’s degree

  • Graduation Rate Within 4 Years 40. %
  • Graduation Rate Within 5 Years 54.2 %

2020 Best RN Programs in Virginia (of 65) ranked by NCLEX-Rn pass rates: 

  • #20 Hampton University; 
  • #34 Norfolk State; 
  • #39 ODU

Medical School Program Rankings 2019

University of Virginia

  • Best Medical Schools Research: 29 of 122
  • Best Medical Schools Primary Care: 6 of 122

EVMS

  • Best Medical Schools Research: 94 of 122
  • Best Medical Schools Primary Care: 49 of 122

Assessment and recommendations

If we citizens of Hampton Roads get a vote, Governor, we pick a merger among William and Mary, Hampton University and University of Virginia to improve medical education in Hampton Roads.  

I personally see no role in this for Sentara. The improved medical and nursing schools can work with and serve all of the hospitals in Hampton Roads, not just Sentara.

And no, Sentara will never stop plotting to expand its empire. It is relentless.  

It has to do something with all those profits besides what it is required to do as a “not-for-profit” which is to improve the health of the people of Hampton Roads.  

Governor, go back again and re-read the brutal statistics about minority health in Sentara’s state-granted monopoly area.  

Then tell the people of Hampton Roads again why Sentara is tax exempt and should be given yet more power.

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31 responses to “The Strange Case of a Proposed Medical Merger in Hampton Roads

  1. Trusting the lying leftist media for your facts again?

    😉

    What is it about youse guys? One day, the media is the armpit of the universe and the next day – the facts from on high you believe?

    How do we know that the lying leftist media is not biased in this reporting as we have heard it is in other reports?

    I realize that Jim Sherlock has not really claimed strong Libertarian principles but what’s the argument against the “market” working like this and why are we depending on the “corrupt” government to ride herd on this? Isn’t this the same feckless govenment that we accuse on a regular basis on these pages to screw up the pandemic and pubilc schools , renewable energy, COPN, and gawd knows what else?

    One day youse guys sound really reaonable then the next – lord knows all heck breaks loose and you’re off on another critical race theory rant!

    😉

    • I know the underlying details about the business of healthcare in Virginia because I have been studying it for 5 years and about halfway through writing a book on the subject.

      Nothing about the business of healthcare here in Virginia has been market based for nearly 50 years since the passage of the COPN law. This story is another instantiation of how it works. Regional monopolies have been awarded by the Department of Health nearly everywhere but Richmond. Those monopolists spend more management time on maintaining and expanding those monopolies than anything else. That is why Sentara pays its EVP for M&A $1.2 million a rear.

      In this case, the government has made the mess and I am trying, likely without result, to keep them from making it worse.

      That is a never ending tale that indeed applies to public schools, renewable energy and other critical parts of the economy.

  2. For several years, EVMS has been looking for a university to merge with. ODU would be the logical one, but the medical school has been looking further northwest to W&M. That makes sense from EVMS’s perspective. W&M has a much larger national reputation upon which it could latch. W&M joined this flirtation a few years ago, but then backed away. The result was the establishment of several “collaborative” arrangements. Sentara had its nose into these discussions, as well. https://rga.lis.virginia.gov/Published/2015/RD170/PDF

    • Sentara doesn’t want William and Mary to take control of EVMS because that means Sentara would lose control. Anyone who has followed Sentara’s business model over the years can see that it is constantly striving for total control of healthcare delivery, health insurance and medical education in Hampton Roads. I doubt they would deny it.

      It is easy to conclude that Sentara would rather destroy EVMS than lose control of it, especially situated as it currently is on the campus of Sentara Norfolk General Hospital.

      • We may have had some similar dynamic on a smaller basis in Fredericksburg starting some years back and continuing.

        It started when we had one hospital – Mary Washington and they pretty much ruled the roost on health care in the region until 2010 when the State approved Spotsylvania Regional Medical with strong opposition from Mary Washington.

        MWH responded by building another hospital in Stafford and a emergency center and imaging facility less than a mile from the new hospital.

        Many local providers got privledges at both hospitals and when signing up for a procedure, people are given a choice of which hospital to have it done at. As far as I can tell insurance reimbursement is the same no matter which facility.

        There IS competition. For instance, both now advertise waiting times at their emergency facilities. Both tout their Medicare scores and other awards and recognitions they have. As far as I can tell EMS takes cases to the nearest hospital.

        Both have relationships with Germanna Community College for nursing schooling.

        I actually went to the Stafford hospital – for a procedure because the doctor was on Mary Washington Hospitals electronic medical record system so that my other doctors all share my medical record and can see others notes and tests.

        So, that Medical Record is a BENFIT to me that I did not have before the competition. And now Mary Washington is setting up it’s own Medicare Advantage program that will coordinate even more providers using the same Medical record – something that will be a benefit to anyone who uses other doctors besides their primary care.

        Mary Washington is actively competing against it’s competition.

        But it’s not going to reduce prices as much as it’s going to result in better care… IMHO.

  3. Maybe I missed it but what is the motivation for these schools to establish a business relationship with Hospitals and Medical care?

    • W&M decided it was not in its best interests. I interpret the agreement for collaborations as a way of allowing EVMS to save face.

    • In this case, Sentara wants the 1600 patients a day currently treated by the EVMS medical group. Sentara wants them referred to and treated by Sentara specialists in Sentara hospitals. And it wants the Governor to sign off to get COPN approval and thus run interference with the federal antitrust lawyers. That is how the game works.

  4. There is a perceived benefit to UVA being affiliated with their Medical School and Hospital system.

    Some say that UVA benefits from the profits.

    But I don’t see others like VaTech pursuing similar relationships (I don’t think) but VaTech is pursuing research in Medical infomatics and related.

    Of course, “relationshisps” can be a wide variety of types and that’s why I was wondering what the specifics were – the core things ….

    I still think that Medicare and insurance companies decide how much reimbursements are with the medical providers either agreeing or refusing to honor govt or private insurance. In other words, if one “follows the money” here – where is it?

  5. This is somewhat related in a way. Mary Washington Hospital in Fredericksburg is setting up it’s own Medicare Advantage program and in doing so setting up a PPO type arrangement with regional providers.

    Are other hospitals systems in Virginia doing something similar?

  6. There is a list of the schools of medicine at Wiki. The vast majority (easily 90+%) are University of ThisorThat Medical School. Got to be a big advantage otherwise there wouldn’t be so many of them.

    A university feeds the school, the school feeds the hospital and the insurance companies make obscene profits.

    • There is indeed a reason. Academic medical centers get paid a lot – a lot – more money by government insurers Medicare, Medicaid, Tricare and CHIP for the identical procedures compared to non-academic hospitals. That premium is meant to cover the cost of training physicians.

      In the case of EVMS as currently situated, Sentara gets the premium payments and gives a fraction of that back to EVMS. EVMS will not get its full share unless it has its own medical center, as do the University medical centers you reference. The Va Tech / Carilion medical school is dominated by Carilion.

      EVMS is dominated by Sentara – they share a campus in Norfolk. EVMS would have to move to have its own medical center. UVA could take control of EVMS, move it to Chesapeake and merge with Chesapeake Regional Medical Center to make a complete package here.

  7. EVMS — The close cover before striking school of medicine, ministry, and heavy equipment operation.

  8. So more dumb questions.

    Does this means more doctors produced?

  9. James Wyatt Whitehead V

    Those graduation rates for some schools are terrible. How in the world does the Southern Association of Secondary Schools and Colleges pass those schools for accreditation?

    This region of Virginia needs to be served better. The infant death rates and prostate cancer rates are too high.

    What about military medicine? How do the bases at Norfolk and so on stack up against the private health care monopolies?

    • Governor Northam claims interest in reducing minority health disparities except here, where he practiced. The textbook rationale for the state granting regional monopolies to non-profits like Sentara is the presumption that organization will plow profits back into community health. Sentara has taken the monopoly and uses its enormous profits for corporate purposes, including massive payments to executives, and the state does nothing about it.

  10. The former Medical College of Virginia is associated with Virginia Commonwealth University. The University of Virginia Health System is associated with UVa. The Virginia Tech Carilion School of Medicine in Roanoke is a venture of Virginia Tech and Carilion Clinic. There must be sold reasons for medical schools to hook up with universities. I don’t know what they are, but it would be useful to find out when we examine the proposed amalgamation of EVMS, Sentara and Old Dominion.

    I’m surprised that the EVMS-ODU-Sentara merger wasn’t pursued long before. The big question is who controls the resulting entity. Who sets the priorities? I’ll bet Sentara is the big kahuna and everything will be subordinated to Sentara’s empire-building agenda.

    One more question — I thought Sentara was pursuing an alliance with Moses Cone Hospital in Greensboro. Is that still on?

    • RE: ” There must be sold reasons for medical schools to hook up with universities.”

      I agree and what would be really helpful would be an objective account of the benefits and I would prsume that some would accrue to patients also because the hospital and doctors would have access to research and newer techniques and procedures.

      We simply do not have a free market in health care, and, in fact, no developed country does either. The only true free markets exist in countries were the government does not provide insurance and sanctions for private insurance – subsidies and rules requiring guaranteed issue and commuity rating.

      We will never get to a free market as long as the government is doing these things, which, in turn, constitute the real world “market” that does exist.

      The biigest anti-poverty program implemented during Lyndon Johnson tenute is almost always ignored by the critics – it was Medicare. How many seniors today would be financially bankrupt if it was not for Medicare? Medicare (and Medicaid) , now drives the market by setting a bar for reimbursements and despite other claims of providers not taking Medicare reimbursement, the reality is that many, if not most do – including the labs. Anyone who actually has Medicare knows this. In fact, most people who have Medicare have no problems finding a physcian or other providers and so Medicare is not only a major player in health care these days – it’s also one of the most cost-effective albeit heavily subsidized – the government pays 75% of the premiums and 80% of the costs and more than that if the senior has a supplmental plan or Medicare Advantage.

      No developed country on the planet has a “free-market” in healthcare, It’s just a myth and we never will as long as the government requires insurance companies to accept all people no matter their health or age.

      If we want a free market, insurance for the older and less healthy would have to become much more expensive and the younger and healthier would get much cheaper insurance because they need health care much less.

    • Yes, Sentara put together the ODU, EVMS, Norfolk State, Sentara package to ensure they maintain control of EVMS.

      Yes, the Moses Cone merger is still being reviewed by the feds.

      The reasons for medical schools to hook up with Universities is so that both can open a university medical center, to which the federal money flows. As I indicated above, all federal medical insurance programs pay very large premiums to academic medical centers. The med schools can seek grants for research based on their integrated status. Universities like UVa benefit because (1) they own the medical school, and (2) they can attract undergraduate admissions from bright kids that want to go to the medical school. Everybody in that coalition wins.

      Money is the reason that Sentara wants to maintain control of EVMS and doesn’t want a university to control it. In the current arrangement, the money flows to Sentara hospitals and it “donates” whatever portion it wishes to EVMS.

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  12. I may have missed it but has any consideration in this thread been given for MCV/VA Comm to take over EVMS, given their closer proximity. Both are in relatively larger, more similar urban jurisdictions than C’ville. I suspect they also have more similar patient populations.

    • Virginia Commonwealth University Ranks #160 in National Universities https://www.usnews.com/best-colleges/vcu-3735/overall-rankings .
      VCU Medical School ranks #68 in Best Medical Schools: Research (tie) and #49 in Best Medical Schools: Primary Care.

      As a Hampton Roads resident, I have to ask for UVa Medical school to take over EVMS and William and Mary to join the coalition along with Hampton University.

      Otherwise we settle for a coalition of mediocrities led by a hospital system that could not care less about medical education except to continue to feather its own nest with hyped up insurance payments.

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