The Conway Regional Health System Board of Directors said Thursday that it plans to enter into “exclusive strategic affiliation discussions” with St. Vincent Health System of Little Rock, an affiliate of Catholic Health Initiatives.
Conway Regional said in October that it was exploring “potential strategic affiliation options,” including partnering with another health care provider or system. The move comes amid sweeping changes to the health care industry.
It also comes as Baptist Health System of Little Rock prepares to enter the fast-growing Conway market with a new, 100-bed hospital expected to open in 2016.
Arkansas Business reported last week that St. Vincent was among the health care organizations that Conway Regional was considering for an affiliation.
Peter Banko, St. Vincent’s president and CEO, said the health system would be flexible about how a partnership with Conway Regional would work.
“We don’t expect patients to come to Little Rock,” Banko said in our April 21 cover story.
Banko also said St. Vincent wouldn’t own, manage or lease property on Conway Regional’s property, and Conway Regional would continue to have its management team in place.
Conway Regional’s news release said the health system expects “several months of further discussions and negotiations before a final agreement can be reached …” It stressed that the deal would not be a sale or acquisiton.
“Both St. Vincent and Conway Regional will retain their autonomy, individual identities and separate corporate governance structures,” Conway Regional said. “The affiliation is intended to be structured in a way that will bring value to both organizations and the communities they serve.”
In his Arkansas Business interview, Banko said a deal between the two would cost savings and revenue growth for both systems.
A Common Vision
In its news release, Conway Regional said it reviewed partnership proposals from “numerous organizations” and determined that St. Vincent’s proposal was “most aligned with the needs and vision of Conway Regional.”
“Their proposal not only accounted for our desire to continue delivering compassionate care to our communities, but was also respectful of the important role we have as a community-based health system,” Jim Lambert, Conway Regional’s president and CEO, said. “Obviously there are many details to work out from this point, but we feel positive about the possibilities of harnessing our collective strength.”
Conway Regional is the latest health system to explore a possible affiliation. The University of Arkansas for Medical Sciences and St. Vincent Health System spent much of the last year pondering an agreement, which the two ultimately scuttled.
And in an unrelated deal, St. Vincent’s parent, Catholic Health Initiatives, acquired Mercy Hot Springs hospital and physician clinic and put both under St. Vincent’s control.
In October, Conway Regional cast the national trend toward hospital affiliations as a response to health care becoming “the target of federal and state regulations and funding cuts.” It said the move is intended to ensure that its health system remains “well positioned in the future to provide health care services for Faulkner County and the north-central Arkansas area.”
Conway Regional operates a 154-bed acute care nonprofit medical center, an outpatient imaging center, an outpatient surgery center, Conway Regional Rehabilitation Hospital and several primary care clinics.
St. Vincent is the second-largest health system in Arkansas. Having completed its deal for Mercy Hot Springs on April 1, it now has four hospitals in the state, with other locations in Sherwood, Morrilton and Little Rock. It also has a rehabilitation hospital in Sherwood.
Baptist Health of Little Rock is the state’s largest health care organization. Once the Conway hospital opens, it will have 10 hospitals in Arkansas. In an interview with Arkansas Business in January, President and CEO Russell Harrington Jr. said Baptist is considering adding more primary care clinics and working with other hospitals in Arkansas to “enhance quality and reduce costs.”