An ulterior motive in merger talks?

Emails: EVMS leaders skeptical of Sentara push for ODU partnership

Eastern Virginia Medical School has appeared to be on board with a study of how it could combine with Old Dominion University and Sentara Healthcare.

But in private, top leaders of the medical school have expressed frustration with the closed-door process, fearing Sentara is trying to force the 47-year-old institution into giving up its independent power and merge with the university.

Internal emails show EVMS leaders believe the merger would mean massive layoffs, especially if their affiliate EVMS

Medical Group were folded into Sentara. And they also expressed concern that if the school were absorbed into Old Dominion, it would give only the illusion of more state funding, as they considered the university to be in poor financial condition.

In a statement, Sentara said it has a vested interest in EVMS’s success. Its desire is that the study will help identify a partner for the medical school that will help it provide health care for the community.

Correspondence between Dr. Richard Homan, president and provost of EVMS, and Dr. Theresa Emory, rector of the school’s board of visitors, reveal their concerns that Sentara, a $6 billion hospital system, wants to free itself of financial obligations to EVMS, a quasi-public medical school, while keeping its faculty and medical trainees as staff, according to records obtained by The Virginian-Pilot.

The conversations show the leaders’ discomfort with a third-party consultant, Manatt Health Strategies, and its study

process, which they say was underway for many months without their knowledge, The Pilot reported on Nov. 1.

Manatt was hired by ReInvent Hampton Roads, a private think tank, whose role and interest in the project have been kept confidential. What was clear then was that Sentara was the primary financial contributor for Manatt’s work, paying $185,000 of the $285,000 contract.

During a virtual town hall meeting open to the public Aug. 6, Homan said the outcome of the consultant’s study could allow the school to work more collaboratively with Sentara and ODU on research.

“There’s no preconceived notion as to what’s going to happen,” he said then.

In private, he and Emory have questioned who the consultant’s real client is. When they discovered that Sentara CEO Howard Kern was also a director on ReInvent’s board, they speculated about motivations.

Comparing notes from phone calls and meetings with Sentara executives, the two thought the consultant was enlisted some time following the school’s request to the company for an additional $70 million a year, a major increase in the $26 million in funding it now receives from Sentara to help staff its hospitals and bolster academic programs.

In that same period, fall 2019, they learned that Sentara was considering a merger with Cone Health, a hospital system in North Carolina.

Emory wrote that she felt “duped” into believing that ReInvent’s study was “an agenda-less effort by concerned citizens.” She thought Sentara’s plan to merge with Cone may have been the reason for a rush to change its financial relationship with EVMS, pushing the school’s costs to Old Dominion and Virginia taxpayers.

“I have reluctantly concluded that barring some major factual oversight, we have been badly misled,” Emory said in an email to Homan. “Perhaps the Governor has as well.”

Gov. Ralph Northam, a pediatric neurologist and EVMS graduate, championed the hiring of Manatt in the interest of improving the “healthcare ecosystem” in Hampton Roads. The Northam administration has said a stronger alliance between these institutions could improve the health of people living in the region. Eastern Virginia lags behind the state and nation in infant mortality, cancer, heart disease and diabetes.

Northam announced the study during a press conference in August, suggesting that recommendations for new collaborations could lead to long-term financial security for the school.

EVMS is a hybrid public-private institution. It has received less government funding than other medical schools in Virginia that are connected to state universities. That means it depends on privately raised money to stay afloat.

In a statement, EVMS spokesman Vincent Rhodes said Manatt’s report will only make recommendations, and no major organizational changes will happen without board approval.

“You’d have to speak to Sentara about its motivations,” he said. “But EVMS has growing concerns about what Manatt Health, ReInvent Hampton Roads and Sentara have been up to, as there’s been little dialogue with us about what they think EVMS’s future should be.”

The school, which had previously declined to talk to The Pilot about the contract, gave the comment and turned over records following an inquiry from a blog, Checks and Balances Project.

Sentara didn’t respond to claims about the company’s role in the initiation of the study or Kern’s position on ReInvent’s board. In a statement, Danya Bushey, a Sentara spokeswoman, said the company has spent millions of dollars to support EVMS’s medical research, faculty positions, master’s degree programs and endowments.

“This study from Manatt has examined possible pathways forward to build on this existing partnership for the benefit of students, patients and public health in Virginia, while at the same time ensuring EVMS has access to all the resources possible to continue to be a leader in training the next generation of our healthcare professionals,” she said. “We are strongly invested in their success and look forward to the end result of identifying a potential partner for EVMS which will benefit the health and well-being of all our communities.”

ReInvent’s chairman John “Dubby” Wynne did not respond to a request for comment.

EVMS and Northam administration officials have not made the Manatt report public, though it was expected earlier this month. Both have answered Freedom of Information Act requests saying it doesn’t yet exist.

Drafts shared with the medical school indicate the consultant wants to recommend that EVMS be merged into Old Dominion, with a plan to spin off the EVMS Medical Group into Sentara Medical Group, either directly or in a new clinical entity. EVMS Medical Group is composed of 150 physician-teachers and 40 other health professionals.

Such a maneuver would result in firings and “a mass exodus of academic clinicians,” Emory said in an email to Homan and Wayne Wilbanks, former rector of the board.

In order to reach Sentara’s desired cost savings, they suspected much of the cuts would be to staff, given that about 75% of the medical school’s budget is personnel spending.

EVMS leaders said Manatt had suggested the medical school’s reserves and operating income be used to pay for a proposed restructuring. Homan said that would likely release Sentara of financial responsibility for the school and could even be used to subsidize Old Dominion, which he said had a deficit of about $47 million over the past three years.

Homan and Emory were pessimistic that being absorbed into Old Dominion would help the medical school with funding.

“This path will provide the facade of state financial support (as you know we did not receive any new funds this year in the Governor’s budget) and reduce/ absolve the obligation of financial support to EVMS from Sentara,” Homan wrote to Emory.

In a statement, Giovanna Genard, an Old Dominion spokeswoman, disputed the comments about the university’s financial situation.

“As a state institution, we don’t run deficits. The Virginia constitution forbids us from doing so,” she said. “We are a financially healthy institution and maintain an A+ credit rating.”

The emails between EVMS leaders in October and early November expose the behind-thescenes strain their institution feels with its hospital system partner.

On the surface, the c o mmun i t y - f o u n d e d school works hand-inhand with Sentara. EVMS is rare in that it is one of the few medical schools in the country unattached to a hospital and larger university system. Because of that, it maintains complex relationships with Sentara and Children’s Hospital of The King’s Daughters.

EVMS and Sentara have partnered for decades, with the hospital system providing clinical teaching environments for the school, and the school providing doctors and medical residents for their workforce.

“I still do not understand what is forcing the rushed pace,” Emory said about the study in an email to Homan. “I can only conclude that the planned merger of Sentara and Moses Cone Health in North Carolina is the action-forcing event.”