UPDATED: St. Vincent, UAMS End Strategic Alliance Talks

The University of Arkansas for Medical Sciences and St. Vincent Health System said Friday that they have ended strategic alliance talks. 

"The University of Arkansas for Medical Sciences (UAMS) and St. Vincent Health System have reached the end of the exploration of a strategic alliance between our two institutions," the health systems said in a short statement Friday afternoon.

"Despite the good faith efforts of everyone involved, neither entity has been able to define a pathway that meets the goals of both institutions."

In the statement, UAMS Chancellor Dr. Dan Rahn said he would recommend to the UA Board of Trustees that UAMS end negotiations with St. Vincent. While ending the talks, the two said they would "keep the door open for other ways in which we might work together in the future."

Peter Banko, CEO of the St. Vincent Health System, issued a statement Friday in which he said a "statewide health network ... is the right thing to do for our community, health care in Arkansas, and economic development in our state."

Banko said the discussions with UAMS identified "more than $80 million" in nonspecific "operational improvements" and that St. Vincent's parent company, Catholic Health Initiatives, was willing to invest more than $200 million in the affiliation.

"Unfortunately, both parties were never able to come to agreement on how best to achieve the vision and value proposition," Banko said.

The two health systems, each with a major hospital in Little Rock, had begun exploring what was variously described as an affiliation or alliance in August 2012. But a joint operation between St. Vincent, privately held and affiliated with the Catholic Church, and state-owned UAMS was fraught with complications, as acknowledged in a document produced last week by St. Vincent (PDF) that broadly outlined two options.

"We fully understand and respect the current challenges (constitutional, statutory, regulatory, political, and others) for UAMS related to an affiliation with St. Vincent," the document said.

St. Vincent made two proposals for the strategic alliance: a close affiliation that would "face ourselves and the market as 'one'" and an option similar to a joint operating agreement for newspapers, where each health system would offer services under its own brand, with some shared functions to be run by St. Vincent.

St. Vincent also proposed selling UAMS up to half of the Arkansas Health Network, which is a group of doctors affiliated with St. Vincent.

The Full Statement

The short statement from UAMS and St. Vincent:

The University of Arkansas for Medical Sciences (UAMS) and St. Vincent Health System have reached the end of the exploration of a strategic alliance between our two institutions. Despite the good faith efforts of everyone involved, neither entity has been able to define a pathway that meets the goals of both institutions.

Therefore, UAMS Chancellor Dan Rahn, M.D., and other UAMS leaders are recommending to the University of Arkansas Board of Trustees that UAMS end negotiations on a strategic alliance with St. Vincent Health System. UAMS and St. Vincent began discussions several months ago in an effort to determine if there was a way to advance our shared vision and purpose of improving the health and health care of the people of the state of Arkansas through a strategic alliance. While we are ending these discussions, we will keep the door open for other ways in which we might work together in the future.

Here's Banko's full statement:

When we started these discussions almost two years ago, there was great promise in an affiliation that could truly build a statewide health network and greatly expand education & research. This is the right thing to do for our community, health care in Arkansas, and economic development in our state.

During the course of our discussions, we developed a vision and value proposition for an affiliation that would “provide world-class, value-based care” and “boldly transform health care delivery”. We found that there was more than $80 million in operational improvements through integration and that Catholic Health Initiatives was willing to invest more than $200 million to support education, research, and the success of the affiliation. Unfortunately, both parties were never able to come to agreement on how best to achieve the vision and value proposition.

We have enjoyed getting to work directly with Dr. Dan Rahn at UAMS and the many other board members and leaders at the University of Arkansas System. We still think an affiliation with UAMS makes sense for our community and St. Vincent would be more than happy to entertain discussions at any point in the future.

St. Vincent will continue its diligent focus on putting the patient first. St. Vincent will continue to work hard to partner with world-class physicians as well as be the workplace of choice for the best and brightest nurses, technicians, and associates. St. Vincent will be building a statewide network in Arkansas.

St. Vincent is the most efficient health system in Arkansas today. We are ranked #1 by U.S. News & World Report including recognition as high performing in eight specialties.  We are the first and only Magnet recognized facility in the state.  That is a great place for us to be today and every day into the future!