LITTLE ROCK —The University of Arkansas for Medical Sciences and St. Vincent Health System said Thursday they have entered into a nonbinding letter of intent to explore opportunities for an affiliation that would better serve patients.
The affiliation would preserve UAMS’ public identify and St. Vincent’s Catholic identify, including women’s and reproductive health care service, the hospitals said in a joint statement.
UAMS Chancellor Dan Rahn said the institutions are looking at ways to work together because hospitals are facing a number challenges, including an aging population, shortage of physicians, nurses and other professionals, inaccessibility to health care in rural areas and the unknown ramifications of health care reform.
"If we are to meet those challenges, we must continue to develop and expand strategic affiliations with other health care organizations that share our vision and values to bring our strengths to improve outcomes and efficiency in our services and expand training opportunities," Rahn said in a release.
Peter Banko, president and CEO of St. Vincent, said St. Vincent and UAMS "have a tremendous amount of cultural compatibility."
"It is the right thing to do and the right time for us to explore opportunities to improve access across the state, lower costs, enhance quality, train the best and brightest health care professionals, and bring to the bedside cutting-edge treatments and technologies," Banko said.
The hospitals said entering into a letter of intent will allow both medical facilities to review the other’s financial and operational information.
Caroline Steinberg, vice president of trends/analysis with the American Hospital Association, said the two Arkansas hospitals are following a similar path with health care facilities across the country in looking at affiliations in response to changes in the health care industry.
"There is a whole range, from actually financially merging to just developing various ways to work together without integrating your finances," Steinberg said.
"I think it is a lot of restructuring to prepare for a different kind of world," she said. "There are a lot of cuts coming down the pike, we know already there are a lot of cuts to Medicare in the Accountable Care Act, and we … expect that there will be future pressure on costs as Congress seeks to reduce the deficit."
Also in the mix, she said, is the move from fee-for service payment to one where providers are paid a lump sum per-person-per year.
"One way, typically, people have approached health care cost reduction is just to ratchet down payments," she said. "There is a real move, instead of ratchet down payments go to better managed care so you provide less care by keeping people healthy, by avoiding admissions, by increasing quality."
In January, Kentucky Gov. Steve Beshear rejected a proposal to merge University Hospital in Louisville with two private hospitals. Beshear, along with Kentucky’s attorney general, said there were a number of constitutional and public policy questions about the merging of the public hospital with the private hospitals.
After the governor rejected the merger, the two private hospitals decided to merge with each other.
Stacey Hall, spokeswoman for Gov. Mike Beebe, said the governor is monitoring the talks between the two hospitals.
UAMS is Arkansas’ only teaching hospital and has the state’s only Level 1 trauma center, along with outreach programs operating in every county and a regional campus in Northwest Arkansas. In additional to the hospital and clinics, UAMS has a medical school, five colleges and a graduate school, as well as eight Area Health Education Centers across the state.
St. Vincent Infirmary Medical Center in Little Rock is the state’s oldest continuously operating hospital. St. Vincent Health System also operates hospitals and clinics in North Little Rock, Sherwood, Lonoke and Scott.