Bull’s Eye Publishing 2000 Virginia Health Care Buyer Articles

Feature Articles

River Makes for Divided Market

Richmond Market Profile

The Richmond region’s managed care market is typical of most markets its size—relatively mature with sufficient population to attract plenty of competition. The market’s distinguishing feature is its geography. More influential than any strategic business moves and counter-moves by key players is the James River, which effectively divides the market in half and keeps people from traveling across it to receive health care.

“The James River is a psychological barrier for many people,” says Chuck Stark, CEO and regional vice president for HealthSouth Medical Center. Stark and many other observers of the market say that Richmond is more like two self-contained communities on either side of the river. Residents have little reason to shop for products and services across the James River when they can find all they need on their own side.

The Cost-Benefits Balancing Act

Richmond is home to many Fortune 500 and Fortune 1,000 company headquarters. The city’s top 10 private employers include Philip Morris USA, Capital One Financial, Circuit City Stores and both of the city’s large health care systems—HCA Richmond Hospitals and Bon Secours Richmond Health System. In addition, Richmond has major pharmaceutical manufacturing and research facilities, chemical and fibers manufacturing, an array of service providers and the microelectronics firms. This type of employer market has proved to be fertile ground for managed care.

Richmond has a very tight labor market. With the market approaching full employment, many employers are reluctant to reduce benefits for fear they will lose employees—even though the employers are watching their health care costs steadily rise. Instead, says Barbara Bailey, a Richmond-based health care consultant with William M. Mercer, employers are controlling costs by tinkering with benefits design and packaging. “Our clients are asking us to work on their contribution strategies,” Bailey says. “If they want to pass along a cost increase to employees, we advise them to consider offering a new benefit along with it.”

In their attempts to appeal to “the new generation of employee,” Bailey says employers are adding such options as vision benefits and dependent care spending accounts while building in more flexibility and choice. Many are opting for three-tiered co-pays for prescription drugs to boost employees’ share of the cost of higher-priced pharmaceuticals.

There has been a bit of upheaval in the managed care market for employers and employees. In Fall 1999, Aetna U.S. Healthcare surprised the Richmond health care community when, after several months of talks, it broke off negotiations with the Bon Secours Richmond Health System, excluding the system’s four hospitals and other facilities from its network. Soon after, 52 primary care physicians employed by Bon Secours’ physician and outpatient services division withdrew from the Aetna network, effective January 1, 2000.

In a news release dated November 8, 1999, Bon Secours predicted, “A large number of workers are expected to switch health plans to maintain access to Bon Secours facilities and its network of Virginia HealthSource affiliated physicians.”

Despite the uproar, Aetna’s cessation of negotiations with Bon Secours proved to be something of a nonevent in the community. “It’s not as much of an issue as we thought it would be, and not as much as I think Bon Secours hoped it would be,” says Bailey. “National employers hate to cancel Aetna totally just because of Richmond. They’re not happy about the situation with Bon Secours, but they’re not all leaving Aetna because of it. Most offer other options that include Bon Secours.”

Paul J. Stone, Jr., a benefits consultant with Group Insurance Concepts of Virginia, says he has had one client switch from Aetna to another carrier, but the exclusion of Bon Secours from the network was only one factor. “The employer got what they considered to be an out-of-whack price increase of around 22 percent at renewal,” he says. “That plus losing Bon Secours meant they had to go somewhere else.”

It may be too early to tell how many employers will ultimately switch health plans, but as of February 2000, Aetna had counted fewer than 500 members lost because of dropping Bon Secours from its network. “That’s 500 out of a base of 140,000 in Richmond,” says Rich Hogue, Aetna’s senior network manager for southern Virginia.

Hogue maintains that the Bon Secours exclusion is not permanent. “We tried very hard to bring Bon Secours into the network,” Hogue says. “We’d like to have them back. There’s nothing in our contract with Columbia that precludes Bon Secours from coming back in. The door is still open.”

Health Plans Offer Cost Control Measures

HMOs have found a great deal of success in the Richmond Region. Total HMO penetration for all members including Medicare and Medicaid is approximately 42 percent, while HMO penetration among commercial employers is approximately 50 percent, according to National Research Corporation’s (NRC) Healthcare Market Guide Study 1999. PPO penetration is less, with a total penetration of approximately 23 percent and a commercial market penetration of about 27 percent. POS penetration for all members is about 4 percent, approximately 5 percent for commercial employers. The market’s leading managed care plans in terms of covered lives are Trigon Blue Cross Blue Shield, Cigna HealthCare of Virginia, Aetna U.S. Healthcare and UnitedHealthcare of Virginia.

With approximately one-third of the market share in its licensed service area, Trigon is also the largest health care insurance company in Virginia. As of February 2000, Trigon covered 42,950 people in indemnity plans, 153,665 members in its HealthKeepers HMO and 186,070 in its KeyCare PPO in the Richmond market.

Throughout Virginia, Trigon’s HMO commercial enrollment grew 13 percent last year, while KeyCare PPO membership increased 27 percent. Trigon’s numbers are in sharp contrast to national surveys, such as Mercer’s National Survey of Employer-sponsored Health Plans, which show HMO enrollment as flat and PPO enrollment with a growth of 3 percent.

Brooke Taylor, vice president of corporate communications for Trigon, attributes the growth to the breadth, depth and stability of Trigon’s provider networks and the company’s pricing strategies. “We’ve seen a lot of irrational pricing in the past several years,” observes Taylor, “but we’ve tried to stick to the actuarial realities and price our plans right every time. As a result, our customers haven’t seen the substantial average premium increases some of the other companies have had to impose.”

By implementing provider contracts based on fee schedules rather than discounts off charges for outpatient procedures, Trigon has further stabilized costs. “Paying a set fee gives us more predictability,” explains Taylor. “Combined with our range of products and service enhancements, this makes Trigon a good value for customers.”

Employers are “looking for a company that can provide health benefits solutions,” says Greg Bowman, president and general manager for Cigna HealthCare of Virginia. “We’re able to offer myriad solutions, depending on the customer’s need.” As of January 2000, Cigna’s Richmond-area enrollment stood at approximately 149,000 for its HMO, POS and Medicare products.

In competing for new business, Bowman says a particular strength is Cigna’s ability to offer HMO products nationwide. The company has also resisted the temptation to lower prices in order to gain market share. “From the outset, we’ve priced our product fairly to reflect medical costs,” he says. Cigna has both capitated and fee-for-service contracts with physicians, with per diems and case rates predominant in its contracts with hospitals.

Aetna U.S. Healthcare continues to integrate its recent acquisitions of NYLCare Health Plans and Prudential Health Care Plan into its operations, converting members to products from the Aetna portfolio at renewal time, resolving service problems and negotiating new provider contracts.

“The transition is going as expected,” notes Mark Sucoloski, district manager for southern Virginia. “We’re going through the process very deliberately”

Aetna is introducing EZLink to the Richmond market, an Internet-based system allowing employers to administer benefits plans online using direct, real-time access to Aetna’s information systems. “Employers are looking for ways to streamline their benefits administration,” notes Hogue. “EZLink enables them to improve efficiency and reduce costs.”

UnitedHealthcare of Virginia, Inc., markets HMO, POS and PPO plans in the Richmond area, offering a broad network of physicians and hospitals. Members covered by UnitedHealthcare’s open access plans are not required to designate a primary care physician and may go directly to specialists without a referral.

The Virginia Multispecialty Services Organization, a provider sponsored network based in Richmond, has teamed with Virginia-Carolina Managed Care, Inc., (VICARS) to create a fully insured plan for employers. Early in 2000, the group began offering VICARS Plus through an association with Frontier and Risk Capital. “We’re a local plan targeting local companies,” says Bruce Donald, COO of VMSO. As of February 2000, VICARS Plus had 250 enrollees.

The VMSO/VICARE network has more than 2,000 physicians and nearly 30 hospitals and markets to employers from the Richmond Region to the Hampton Roads Region and south into northeastern North Carolina. As the group continues to market VICARS Plus, Donald says he hopes to identify and work with other local and regional networks. “Until now, managed care has been price-driven,” he observes. “The model that has to evolve will be driven by utilization management. As that happens, offering local utilization management will be a real competitive strength.”

A relative newcomer to the Richmond market is Charlottesville-based QualChoice of Virginia Health Plan. “We do have a presence in the Richmond marketplace—one of the most highly penetrated managed care markets in Virginia,” says Liz Nottingham, senior provider relations representative. “We currently have 1,353 physicians participating throughout the tri-cities area and include the major hospital systems.”

Providers Draw Lines in the Sand

The James River’s impact on the Richmond health care market is perhaps best illustrated by the two largest health care systems serving the area—Bon Secours and HCA. Bon Secours is part of an international, not-for-profit, Catholic sponsored health care ministry. HCA is a national, for-profit hospital chain. All four Bon Secours hospitals are north of the river, while HCA, which operates five hospitals in the Richmond area, dominates the southside.

“The James River feels like the Great Wall,” says Lori Kaczmarek, vice president of managed care for Bon Secours. “Two suburban communities have developed, one on each side, and there’s a very strong tendency to stay on your side. Columbia has effectively leveraged its geographic monopoly in its negotiations with health plans because the plans know they have to have southside hospitals in their networks to be able to market their products.”

Bon Secours plans to break HCA’s southside monopoly with its new 130-bed St. Francis Medical Center to be built on a 40- to 50-acre tract near the Powhite Parkway and Route 288—south of the James River. In December 1999, Bon Secours received conditional approval from the Commonwealth’s health commissioner to transfer beds from its downtown Stuart Circle Hospital to the new facility. Construction on the hospital and its adjacent medical office buildings is scheduled to begin in Spring 2001. Bon Secours expects to finish the $69.5 million project in two years. Swart Circle is now a short-stay surgical, diagnostic and urgent care facility.

HCA has responded to Bon Secours’ planned entry into its territory by challenging the state’s approval of transferring Stuart Circle beds. “The application fails to meet state standards,” maintains Mark Foust, director of communications for HCA. “The Certificate of Public Need standards were designed to prevent building a new hospital where beds aren’t needed. Based on the numbers, the situation here doesn’t rise to the threshold of need.”

While HCA awaits a court ruling on its challenge, Bon Secours is proceeding with its plans for St. Francis. “There was so much at stake to win the Certificate of Public Need,” says James M. Goss, vice president of public relations for Bon Secours Richmond. “Across the board, on average, our prices are 20 to 25 percent lower than HCA’s. We believe St. Francis is going to lower health care costs in this market by $14 million a year.”

While Bon Secours and HCA duke it out, other Richmond-area hospitals are working on their own situations.

The primary teaching facility for Virginia Commonwealth University, Medical College of Virginia Hospitals (MCV) also operates outpatient facilities on both sides of the James River in downtown Richmond. With a full-time faculty of 650 physicians and about 600 residents, the hospital draws patients from throughout the region to more than 100 specialty clinics and patient care centers.

MCV shares the state’s total market with the University of Virginia, according to Carl R. Fischer, CEO. “The two of us have divided up the state,” he says, describing MCV’s primary service area as extending north to Fredericksburg, east to Virginia Beach and south of Richmond to the North Carolina border.

For the past five years, MCV has contained costs by reducing staff through attrition and retirement. This year, for the first time, MCV had to lay off about 50 people to reach its staff reduction goal of 220 positions. “We don’t see much opportunity for further reductions,” Fischer says, explaining that the staff cuts have not had a negative impact on quality of care. “We’ve been careful in that regard. It helps that our census has reduced as the length of stay has gone down, with a corresponding growth on the outpatient side.”

MCV has contracts with virtually all the managed care plans operating in the area, negotiated by a managed care department serving the hospital and its physician group. Like most teaching hospitals, Fischer says MCV’s costs are higher than other hospitals, a fact many managed care companies seem to disregard. “When we sit down to negotiate with managed care plans, they want the lowest inpatient rates in town,” Fischer says. “Nobody wants to recognize academic medical centers are different. They want to pay us below cost. We’re just about breaking even now, but a lot of academic medical centers are having serious problems because of that.”

Since its full renovation and name change in 1997, downtown’s Capitol Medical Center has evolved into “a great little hospital,” says Lori Snavely, director of marketing and business development. Capitol has spacious, all-private rooms and staffs 133 of its 179 licensed beds. As downtown revitalization continues, Capitol is leveraging the convenience of its location for city dwellers as well as employees working downtown. “Our tagline is, `We care for the city,’ and we try to show that in every way we can,” she says.

Capitol is a relative newcomer to managed care. “In 1997, we had zero percent managed care,” says Timothy Fritts, vice president of managed care and physician services. “In three years, that has increased to 28 percent of our revenue.”

HealthSouth Medical Center, an acute care hospital in Richmond’s far West End, serves Henrico, Goochland and Hanover counties. The facility is one of five acute care hospitals in the international HealthSouth system, the nation’s largest owner of freestanding physical therapy and rehabilitation facilities. “HealthSouth got its start in rehabilitation,” says Chuck Stark, CEO. “This was an orthopedic specialty hospital when we bought it in 1992. We’ve made it into a multispecialty hospital, but we still have centers of excellence in orthopedics.” HealthSouth also focuses on occupational health and has six area facilities to serve employers.

As part of Aetna’s provider network, HealthSouth has experienced an increase in volume since the first of the year when the Bon Secours hospitals were excluded. “There is most definitely a difference since the first of the year,” Stark says. “It’s still early, but we’re already seeing a marked increase in Aetna referrals.”

Cost-containment and annual admissions growth averaging five percent over the past four years have kept not-for-profit Southside Regional Medical Center in Petersburg financially sound, says Don Haraway, senior vice president of finance. However, “The continued shift to managed care is impacting the hospital’s bottom line,” he adds.

Most of Petersburg’s family practitioners admit exclusively to Southside Regional, but the hospital is excluded from two national plan networks for some or all of its services. While the hospital is part of Aetna’s network, its contract with Prudential ended December 1, 1999, after contract negotiations failed. “We’d had a contract with them since they started here in the 1980s,” says Haraway. “They wanted to pay us substantially less than the other managed care plans, so we were not successful in reaching an agreement.” Until all Prudential members have completed the transition to comparable Aetna products, the hospital will remain outside their provider network.

Southside Regional is also not in the Cigna network for outpatient diagnostic radiology services. “When local practitioners want a patient to have an x-ray, they have to schedule it at John Randolph (one of the HCA hospitals), and the patient is put to the inconvenience of traveling to Hopewell,” Haraway says.

According to Cigna officials, the decision to exclude Southside Regional and other not-for-profit hospitals was made on the basis of cost and quality issues. “After a lengthy request-for-proposal process in mid-1997, we embarked on an exclusive contract for outpatient diagnostic radiology services with HCA to maximize the quality of services for our members while maintaining reasonable and affordable premium levels,” Bowman says.

Home-Grown Plans Dominant in Central Region

Central Virginia Market Profile

In an area steeped in the history of Thomas Jefferson and the beauty of the Blue Ridge Mountains, the Central Region’s small cities and rural counties have remained inwardly focused when it comes to health care. Strong local plans with ties to providers in three of the region’s largest cities—Charlottesville, Lynchburg and Danville—join Trigon Blue Cross Blue Shield as the largest managed care players in the market

“To some extent, the Lynchburg market is essentially closed to all but Trigon and the local plans,” says Buck Bradley, a broker and president of Bradley & Associates in Lynchburg. “Charlottesville and Danville have some additional choices. But about the only thing we can show employers in Lynchburg—especially for groups of 50 or smaller—are Trigon and Piedmont Community Health Plan. Both are good, but we can offer a lot more choices outside the area.”

Limited Choices for Employers

Most Central Region employers are prospering in a strong economy, and parts of the region are experiencing unemployment rates that are better than the national average of 4.5 and the Commonwealth average of 2.8. As of January 2000, 1.6 percent of Charlottesville’s work force was unemployed, and Lynchburg’s unemployment rate was 1.7 percent. In contrast, unemployment in Danville stood at 5.1 percent.

Depending on an employer’s particular situation, some are shifting more of the cost of benefits onto employees, while others are creating richer benefits packages. “We’re seeing a lot of employers who have not previously had their employees contribute now start picking up some of the premium costs,” Bradley says. “There also increasing deductibles and co-pays as well.”

However, he continues, “Some employers have said they don’t want to tamper with their benefits because they want to attract and retain employees. In some of the very labor-intensive industries, we’ve had employers actually increase coverage and add benefits like dental or vision plans. They want to make sure they don’t lose key employees because they feel losing even one or two would cost them far more than what they could save by reducing benefits.”

“We’re trying to be the best employer around,” says David E. Miller, CFO for L.A. Lacy, a Charlottesville-based plumbing contractor with 140 employees. “The company pays 60 percent of medical plan premiums for employees with fewer than five years of service, and after five years, we pay 100 percent for the employee and a percentage for dependent coverage. The longer you’re here, the more we pay”

During his 10 years with the company, Miller says L.A. Lacy has switched its medical insurance carrier several times due to service issues and skyrocketing premiums. “We were with Blue Cross Blue Shield and then went to MAMSI, then to QualChoice and then back to Trigon,” he says. “We are currently happy with Trigon, but we wish there were more alternatives. It would probably help keep prices competitive.”

Employers in Lynchburg joined physicians, hospital administrators and insurers in 1989 to form a coalition to focus on workers’ compensation issues. The Lynchburg Health Care Coalition now meets quarterly, appointing task teams to address health care issues as they come up. “We’ve just formed a team to look at employees whose doctors give them written excuses when they miss work,” says John Gray, human resources manager of Weyerhaeuser Company. Gray co-chairs the coalition’s workers’ compensation task team, which he says is now in “maintenance mode” after doing most of the difficult problem solving in the early 1990s.

These days, Gray says the coalition is focusing more on continuing education of its members and on promoting wellness. “We have educational meetings and share information in local seminars and mailings—any way we can get health care information to the community,” he says.

Regional Health Plans Offer Comprehensive Coverage

PPO plans are beating out HMO plans for business in the Central Region. Total HMO penetration for all members including Medicare and Medicaid is approximately 20 percent, while HMO penetration among commercial employers is approximately 27 percent, according to National Research Corporation’s (NRC) Healthcare Market Guide Study 1999. Total PPO penetration is around 30 percent, and commercial market penetration is approximately 35 percent. POS penetration for all members is approximately four percent and approximately six percent for commercial employers.

The region’s managed care market has three hometown favorites with strong ties to local health care systems: QualChoice of Virginia Health Plan, based in Charlottesville, Piedmont Community Health Plan, based in Lynchburg, and Gateway Health Alliance, based in Danville. Trigon, with between 25 percent and 31 percent of the market, has members throughout the region, and Cigna HealthCare of Virginia, MAMSI, UnitedHealthcare of Virginia and Aetna U.S. Healthcare compete for the remaining market share. Community Health by Optima, which is partnered with Martha Jefferson Health Services, is a fairly new player in the Charlottesville market.

QualChoice is the managed care leader in terms of covered lives in the Charlottesville market. The University of Virginia and the UVa Health Services Foundation created QualChoice in 1995 and co-own about 95 percent of its shares. The remaining shares are owned by Martha Jefferson.

The best-selling QualChoice product is its triple-option POS plan, which offers three combinations of copayments and deductibles with varying levels of choice. “QualChoice saw substantial improvement to its operating margins in 1999 and approached break even,” says Marty D’Erasmo, president and CEO. “We anticipate a profit in 2000.”

Since joining QualChoice in October 1998, D’Erasmo has implemented a number of changes that are stemming the flow of red ink. “One thing that has made a difference is just paying attention to the details of running the business—especially underwriting and actuarial realities,” she says, citing pricing appropriately to reflect the benefit and more aggressive vendor contracting as additional factors.

QualChoice is actively marketing throughout its service area. “QualChoice is evaluating opportunities for expansion into new markets,” says Kathy Terribile, senior vice-president of sales and marketing. “We are focusing our efforts in areas contiguous to our current service area. That focus supports our current clients and provides opportunities for new memberships.”

Lynchburg’s Centra Health, in conjunction with Integrated Health Care, an organization of more than 250 Lynchburg-area physicians, created Piedmont Community Health Plan in 1994. Other Lynchburg players are Trigon, Cigna and MAMSI. “UnitedHealthcare is just now trying to enter the marketplace,” says Marijo Lecker, vice president of Centra Health. “They have to have a provider network to sell business, yet it’s difficult for us to know what volume of business we’re looking at when we can’t predict membership.”

Cheryl Midkiff, director of marketing for Piedmont Community Health Plan, reports total membership of 34,500 as of February 2000, including about 5,600 members of fully insured plans marketed through its licensed HMO subsidiary, Piedmont Community HealthCare.

Midkiff cites Piedmont’s Lynchburg roots as a primary competitive advantage. “Being a local plan, we’re easily accessible,” she says. “When our customers have a problem, they can stop by the office and we can go talk to the decision-makers. We’re not a huge operation, either, so employers can deal with the same people.”

Although Midkiff encounters employers based outside Lynchburg who prefer to insure all employees under a single statewide or national plan, a number of local groups contract with Piedmont independent of other company locations. “We have quite a few who split out pieces of their plan for the employees who are here,” she says. “In some cases we have set up groups of four or five on a fully insured arrangement”

Danville’s local managed care market contender is Gateway Health Alliance, a PHO co-owned by Danville Regional Health System and the Danville area physicians. Gateway works with many self-funded employers on a direct contract basis, as well as fully insured clients through its partnership with Southern Health Services, a Richmond-based insurer licensed to operate in Gateway’s service area.

“Gateway has changed a lot in the last couple of years,” says Brett Jackson, executive director. “We did away with gatekeepers at the beginning of 1999. We still structure benefits to encourage members to see primary care physicians first, but we decided any savings that came with requiring referrals didn’t offset the pain it caused members and providers.”

The 176 employees of Shorewood Packaging have been members of Gateway Health Alliance since July 1999. “It’s still sort of new,” says LeaAnn Grogan, human resource specialist. “Gateway is still working to get more providers in the network, and that will give us more choices, but we’re happy with the ones we’ve worked with so far.”

As of March 2000, Gateway had 17,500 members, including about 13,000 whose medical care and utilization review the PHO manages on behalf of the payer. Other members simply access the provider network through Gateway’s PPO.

In all three Central Region markets, Trigon has approximately 155,000 covered lives in the Central Region in its HealthKeepers HMO and KeyCare PPO. “We have a very strong presence wherever we are, and we had a very good year last year,” says Brooke Taylor, vice president of corporate communications. “Statewide, our commercial enrollment in HealthKeepers grew more than 12 percent and our KeyCare PPO grew 27 percent”

Trigon’s provider network includes all acute care hospitals in the Central Region and most of the primary care physicians and specialists. “With stable networks throughout Virginia, Trigon is the one to count on for product choice and competitive prices,” Taylor says. “In Charlottesville, for example, we offer both HMO and traditional plans, along with our popular KeyCare PPO.”

Area Hospitals Excel

The Central Region’s leading provider, Charlottesville’s University of Virginia Medical Center, recently distinguished itself for the second consecutive year by qualifying for the 1999 “100 Top Hospitals” list, the annual survey released by HCIA and William M. Mercer.

Earlier in the year, UVa made HCIA’s new “100 Top Cardiovascular Hospitals” list identifying the best-performing hospitals in coronary artery bypass graft surgeries and coronary angioplasty procedures. The listed hospitals had significantly lower mortality and complication rates than the national peer group and average per-case costs $3,000 lower than the group average.

A value improvement program launched six years ago to focus more on patient satisfaction and quality may well be the single most important factor in the Medical Center’s growing national reputation. Recently, the program’s emphasis has shifted to performance enhancement. In August 1999, UVa hired consultants to help identify ways to improve the system’s annual financial position by at least $40 million by 2003. In February 2000, multi-disciplinary teams began developing strategies to enhance revenues and reduce expenses.

For the past eight years, Milton Dunlap has negotiated UVa’s contracts with service providers and plans. Currently he and his staff of four preside over more than 50 managed care agreements, including a number of carve-out contracts for transplants.

“We do all of our contracting in coordination with our practice group of about 600 doctors—the Health Services Foundation,” Dunlap says. “It’s a separate corporation, but neither of us will go forward without the other.”

Dunlap says that while payers are “frequently looking for substantial rate concessions” in contract negotiations, consumers’ insistence on choice has tempered plans’ bargaining style. “Plans have tended to back off on the exclusive contracts with hard steerage because people don’t want to be told they have to use a certain doctor or hospital,” he observes. “As a result, plans aren’t quite as aggressive in negotiating rates. Most of them realize it’s important to have UVa on board, so we end up finding that balance where we’re both content to go forward.”

Martha Jefferson Hospital, also in Charlottesville, has developed a loyal following among patients by emphasizing personal attention. To accommodate the community’s dual hospital preferences, the 180-bed Martha Jefferson offers a number of services also available at UVa, and some physicians have privileges at both hospitals. UVa and Martha Jefferson also jointly own and operate a heart catheterization lab at the smaller facility.

Through the Martha Jefferson PHO, the hospital and its physicians have direct contracts with a number of area employers as well as provider relationships with all major managed care plans serving the Charlottesville market. Formed nearly a decade ago, the organization transformed itself into a for-profit PHO in 1996.

Lynchburg’s Centra Health is a not-for-profit organization that includes Lynchburg General Hospital and Virginia Baptist Hospital as well as primary care practices in surrounding communities, health care clinics, a nursing center, a counseling center and a diagnostic lab. The health system works closely with area physicians and with members of the Lynchburg Health Care Coalition to address community health care concerns as they arise. Currently, Centra Health staff members are working with the coalition on equipping employer locations with automatic external defibrillators (AEDs).

“We’ve been encouraging coalition members to purchase AEDs and get training on how to use them,” Lecker says. “That’s just one example of how the coalition has evolved from its initial cost review orientation to more of a focus on wellness and, in this case, on quicker reactions to medical emergencies.”

Centra Health also supports the coalition by presenting educational programs at meetings. Most recently, Centra presented a program on Virginia’s Children’s Health Insurance Act. “There’s money available to cover more children who might not have third-party insurance coverage,” explains Lecker. “We did a presentation to the coalition and asked them let their employees know this money is available and how to apply for it.”

In Danville, the Danville Regional Health System operates Danville Regional Medical Center. The system also includes a primary care network, an occupational health program, a nursing home, independent and assisted living facilities and behavioral health services.

Brad Sexauer, the system’s vice president of planning and marketing, says the 16-doctor primary care network is the system’s response to a shortage of primary care physicians in the Danville area. “We saw this need in the community, and we decided the only way it was going to be met was for us to offer an employment option because that is what many primary care physicians were requesting,” he explains, adding that the system operates its physician practices at a loss. “At this point we feel pretty good about our supply of primary care physicians.”

Sexauer says the Danville Regional Health System is part of several managed care networks, but “we don’t sign all the managed care contracts that are sent to us. We sign the ones that make sense for us—the ones that will bring us additional new business and reasonable discounts that are in line with our other contracts.”

East of Danville, at the region’s southeastern tip, Greensville Memorial Hospital in Emporia is operated by Community Health Systems, based in Brentwood, Tenn. The company owns or leases about 50 hospitals in 20 states.

While operating Greensville Memorial under the lease, Community Health Systems will invest between $3 5 and $40 million in a new facility to replace the current hospital. The new facility will be built at the intersection of Highways 58 and 301, a half-mile from I-95, on property adjoining the current hospital grounds.

Gene Faile, CEO since May 1999 says the hospital has asked for 104 beds in its December 1999 application for a Certificate of Public Need (CON). “Our vision is to become a medical center—perhaps, even a regional medical center—so people will no longer have to travel out of our area for services we can perform,” Faile says.

Soon after joining Greensville Memorial, Faile says he visited area employers “to find out what they’re looking for from their health care provider.” Most told the new hospital CEO that their top priority is excellent emergency care, followed by local access to more specialists. While waiting for state CON approval, Faile is overseeing renovations in the current hospital’s emergency and obstetrics departments. “We’re not investing a lot in this physical plant, but we are going to spend up to $9 million on new medical equipment and furnishings we can take with us to the new hospital,” he explains.

The hospital is also recruiting new doctors to the community and helping them establish practices. So far, a family practitioner, an obstetrician and a pediatrician have agreed to open new practices by midsummer in Emporia. “We’ll be recruiting other specialists as we identify services we want to offer here,” says Faile. “With the addition of the many new physicians we will be bringing to the area along with the building of a new regional medical center, the future of health care delivery in south-side Virginia is very bright.”

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