Virgina providers Riverside Health System and UVA Health have cut a strategic partnership deal that expands complex care access and coordination for patients in the eastern part of the state.
Announced Tuesday, the arrangement gives UVA Health a 5% ownership stake in Riverside, which runs seven acute and specialty care hospitals, in exchange for financial commitments to expand care services in Riverside’s markets. The affiliation leaves both organizations’ governance and administrative structures intact, they said.
“We're really excited about this, and we think the synergy is incredible," K. Craig Kent, M.D., UVA Health’s CEO and executive vice president for health affairs, told Fierce Healthcare.
The deal paves the way for care coordination across several specialty care areas, in particular adult and pediatric transplantation, according to the announcement. It also allows the organizations to share their expertise and collaborate on clinical program development, medical research and clinician education programs, the systems said.
One such upcoming collaboration stems from work at UVA to build a biotech institute, which the executives said could benefit—and benefit from—Riverside's large patient base.
"The idea behind the institute is to create these new cutting-edge therapies and then have then in early-stage clinical trials," Kent said. " Wouldn’t it be wonderful if people … in eastern Virginia have access to those trials? With this relationship … I think there’s an incredible opportunity. That’s one example of the synergy that we can provide.”
The partnership and synergies also stand to help the organizations limit the rising cost of healthcare in their respective markets, Mike Dacey, M.D., Riverside Health System’s CEO and president, told Fierce Healthcare.
However, the current arrangement between UVA and Riverside is "superior to a merger" because it allows each organization to directly address the needs of their local communities, he said.
When organizations merge and get too large, he continued, "they don't necessarily pay attention to either [of] their local communities, or their primary mission, or other aspects of who they are as an organization. And so we think this gives us the best of both worlds. It gives us the advantage of allowing [Riverside] to maintain our focus on our local communities in our case, and in the case of UVA [also their] medical education mission and other aspects."
Both executives stressed that their deal wasn't fueled by finances, as both organizations are already "in a strong position."
From Kent's perspective, such finance-focused deals tend to be less successful for both parties and for patients compared to those based on shared chemistry. He said the current partnership deal puts the latter component first and foremost.
"I don't think a merger is necessary to have incredible benefits at most organizations. It's really about people, it's about the synergy, it's about the programs that you build. You can do that with a unified financial structure, and you can certainly do that without.
"I think the best interests of both of our organizations is to do without, but it does not make me any less optimistic about what the potential of this relationship will be," he said.
Dacey said his system had been seeking an academic medical center partner for nearly half a decade. Riverside had a relationship with UVA dating back to a radiosurgery joint venture program from the mid-2000s, he said, and so had long known UVA was "an organization that shared our values about doing the right thing for the patient each and every time … As we were searching for an academic partner, they immediately came to mind."
The executives said their organizations had been working on the strategic partnership for nearly a year and that some of the logistical groundwork for the collaborations is already underway. Both organizations are on Epic's electronic health record system, "and that's a big plus, that makes these types of collaborations easier," Dacey said.
The longer, monthslong component of the partnership will be building the relationships between each organizations' clinical leaders and caregivers necessary for coordinated care programs—though Dacey noted that "to some extend they're present already, because there's a lot of patients that are already referred back and forth."
Riverside serves more than 2 million east Virginia residents across its four acute care hospitals, three specialty hospitals and more than 100 other medical group offices and other facilities.
The Newport News, Virginia-based nonprofit employs nearly 10,000 people and saw longtime CEO Bill Downey transition the top role to Dacey at the beginning of this year. For the purpose of the deal and UVA's 5% stake, Riverside is valued at "a little over a billion dollars," Dacey said.
UVA Health, part of the University of Virginia, employs about 16,000 people across UVA Health Medical Center, three community hospitals, its UVA Children’s hospital, an integrated network of primary and specialty clinics, and academic institutions such as its School of Medicine and School of Nursing.
UVA Health reported roughly $3.6 billion in total operating revenue and a 1.1% operating margin during fiscal year 2022 (ended June 30, 2022).