Duke Health, LifePoint Form Community Hospital Joint Venture

Duke University Health System, Inc. and LifePoint Hospitals have partnered to create "flexible affiliation options" that will range from joint ventures to outright ownership of community hospitals in North Carolina, the two healthcare providers have announced.
The joint venture -- DLP Healthcare, LLC -- combines Brentwood, TN-based LifePoint's financial resources and experience managing community-based hospitals with Durham, NC-based Duke's development of clinical services and quality measures. The partnership is one of the first between an academic health system and a for-profit hospital company, Duke/LifePoint said.

"This is a challenging time for many community hospitals as the healthcare environment undergoes significant change and costs continue to rise," said William F. Carpenter III, chairman/CEO of LifePoint Hospitals. "Duke/LifePoint has the ability to help hospitals not only weather the months and years ahead, but also prosper and offer their communities even better care."

Maria Parham Medical Center, a private, non-profit, hospital in Henderson, NC, this week signed a nonbinding memorandum of understanding that would make it the first hospital in the new network. Under the partnership, MPMC would retain 20% ownership and Duke/LifePoint would have 80% ownership, but governance would be shared 50/50, "giving the community an equal and long-term voice in the strategic direction of the hospital," MPMS said.

MPMC assets and the proceeds from the transaction would eliminate MPMC's debt, and the remaining assets -- approximately $30 million -- would create a locally governed charitable foundation to fund new programs and services in the service area, which includes north central North Carolina and southern Virginia.

"For the last year, MPMC has explored the possibilities of a partnership or affiliation that would allow us to strengthen our hospital," said W. Beverly Tucker, MD, chairman of the MPMC board, and family physician. "After lengthy consideration, the MPMC board unanimously determined that a partnership with Duke/LifePoint has the potential to bring a powerhouse of clinical and operational resources that could enhance our ability to grow and provide more services to patients."

LifePoint brings to the venture access to investment capital for new technology and facility renovations. Duke will help MPMC and other affiliated hospitals develop clinical services, support enhancing quality systems, and provide access to specialized medical services and best practices.

"Duke and LifePoint share a commitment to working collaboratively with communities, physicians and hospital staffs to optimize the availability of innovative healthcare services locally, while applying proven operational strategies that are more important than ever in the era of healthcare reform," said William J. Fulkerson, Jr., MD, executive vice president of Duke University Health System.

Jone L. Koford, president of strategic growth and development at LifePoint, said the "flexible affiliations" with other hospitals "really range from full acquisition, you could do a long-term lease of the facility, or a joint venture with the facility, like we are doing with Maria Parham."

There is no predetermined target number of hospitals that Duke/LifePoint would like to see in the partnership, Koford said. "The number of hospitals that we believe will want to consider partnership will need access to capital, will want operational expertise or resources they currently don't have, and would love to have the relationship with Duke and their reputation," she said.

"The combination of what we bring to the table, our operational excellence, our access to capital, our commitment to quality, Duke's reputation, their clinical expertise, you couple those and offer them to a stand-alone community hospital that is facing many challenges, more so in the future with health reform and the increases in regulation, and the capital commitments that will have to be made for IT, those kinds of things, they need a strong partners going forward. We believe the DLP partnership offers them the best of both worlds," she said.

Koford said LifePoint is also "in discussions" with other health systems in other states about setting up similar partnerships. "We look for those systems that have a strong market position and a very solid reputation for quality," she said.

LifePoint Hospitals operates 52 hospitals in 17 states, and specializes in community hospitals in non-urban markets where the hospital is the sole provider in most of the communities it serves. Duke University Health System has inpatient and ambulatory locations across North Carolina and surrounding areas, and has partnered with hospitals in its region to establish specialized medical services in their communities.