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Children’s hospital plan evaporates

Jeremy M. Lazarus | 5/29/2015, 6:46 a.m. | Updated on 5/29/2015, 10:42 a.m.
Richmond will not be gaining an independent, free-standing children’s hospital — at least not in the near future. Two of ...
Dr. Michael Rao,Toni Ardabell

Richmond will not be gaining an independent, free-standing children’s hospital — at least not in the near future.

Two of the area’s largest hospital systems, Bon Secours and VCU, have pulled out of the huge project — just seven months after signing an agreement to participate in creating the projected $600 million children’s health center.

The participation of the two systems, which handle about 75 percent of all pediatric hospitalizations in the region, was seen as key.

Both nonprofit systems would have had to agree to close most of their pediatric services and send patients to the new hospital for it to have a chance at success, consultants and others involved with the project indicated.

In the end, neither nonprofit system was willing to mothball any of the children’s health services on which each had spent heavily to build up. Both ultimately agreed with Richmond’s third big hospital system, for-profit HCA, that centralizing services in one place is the wrong way to go.

HCA, which operates six hospitals in the region, never supported the creation of such a hospital and refused to participate in the planning.

Whether Richmond needs such a hospital always has been a question, despite advocates’ certainty that the hospital project would allow the region to end its status as a place that sends young patients with complex problems out of town.

All three hospital systems have poured more than $300 million during the past decade into hiring dozens of specialists and sub-specialists to improve the capacity to serve children’s needs and in beefing up facilities.

VCU, particularly, has invested in new facilities. Examples: The new $168 million children’s outpatient center VCU is building in Downtown and the $56 million children’s psychiatric center going up at 1308 Sherwood Ave.

The VCU-Bon Secours decision was disclosed at a press conference May 22 at the Children’s Museum of Richmond.

Dr. Michael Rao, president of Virginia Commonwealth University and its separate health system, said that months of talks resulted in the conclusion that the children’s hospital was just too risky given the current state of the health care business.

He said trends show that consolidated care networks with multiple streams of revenue and a focus on outpatient and home-based services are succeeding at a time when smaller, stand-alone hospitals either are closing or selling out to larger systems.

“The proposed independent model looks to be opposite of the general direction in which health care is tending to focus,” Dr. Rao said. “At this point, what we saw was that we couldn’t manage the kinds of risks that we saw with the costs that would be inevitable.”

Toni Ardabell, chief executive officer of Bon Secours Richmond Health System, added that issues of “equity, ownership and governance” also could not be overcome to the satisfaction of Bon Secours, a Catholic system that operates four hospitals in the region.

“We felt that we could not give away the pediatric part of our mission and ministry and not also have some ownership of the new hospital,” Ms. Ardabell said.