Thursday, March 24, 2005
Smyth County hospital will break from Carilion
The affiliation no longer serves its original purpose, an official said.
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While many rural hospitals are melding with big health care companies, a breakaway Southwest Virginia hospital is going independent.
Smyth County Community Hospital in Marion will separate from Roanoke-based Carilion Health System, now half owner, the hospital said this week. The two struck a partnership during the 1990s to shelter Smyth County Community Hospital from pressures that were expected to result from the rise of managed care insurance.
The strictest kind of managed care - in which tight-fisted intermediaries control health care spending - never became popular in Southwest Virginia, and so the two sides have agreed to sever an affiliation that no longer serves its original purpose, said Will Mahone, the hospital's chief executive officer.
The two sides are detailing how Smyth County Community Hospital will compensate Carilion, which paid $26 million for half of the hospital in 1998.
The deal should go through by September, Mahone said.
The hospital's board will then write a fresh strategic plan. The hospital is not talking to suitors, may not need outside money and is going to give independence a try, said Mahone, who announced the news to the hospital's 640 employees Tuesday.
Contrast that with Wythe County Community Hospital in Wytheville, which has said it wishes to affiliate with a larger company that has money for needed hospital improvements. Wythe County Community Hospital had a deal to affiliate with LifePoint Hospitals in Tennessee, then appeared close to affiliating with Carilion instead, at which point LifePoint sued. The question of who Wythe County hospital might affiliate with is pending in U.S. District Court in Roanoke.
Smyth County, with a population of just more than 30,000, is a one-hospital area. The hospital, which opened in 1967, averages about 40 overnight patients, Mahone said. It lost money last year after the departure of some doctors, but different doctors took their places and are rebuilding the practices, Mahone said.
Meanwhile, Carilion agreed earlier this month to buy 80 percent of Stonewall Jackson Hospital in Lexington. The rest will belong to a local foundation under terms of the deal, which is scheduled to be signed May 31 if approved by Virginia's attorney general.
