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Via Christi Joins Kansas Heart

Saturday, May 5, 2007

Section: BUSINESS & MONEY
Page: 6B
Source: BY ANDI ATWATER
The Wichita Eagle

VIA CHRISTI JOINS KANSAS HEART
Health network buys minority share of hospital

Via Christi Wichita Health Network purchased a 49 percent business interest in Kansas Heart Hospital, the health care providers announced Friday.

Officials would not disclose terms of the deal, which closed Friday and comes 10 years after Via Christi originally backed out of owning 40 percent of the hospital before it was built.

The investment essentially makes Via Christi a competitor of a business it now partially owns. In a statement, Via Christi president and chief executive Larry Schumacher said Kansas Heart’s high industry ranking and a preference by patients for specialized facilities with private rooms makes the investment a sound business move.

“Investing in a model of care favored by consumers and physicians and whose quality has been independently confirmed is in keeping with our mission as it allows us to re-invest our returns in our broader mission,” he said.

Via Christi’s move is not surprising given today’s competitive environment with physician-owned businesses, said Cindy Samuelson of the Kansas Hospital Association.

While hospitals still have issues with limited-service hospitals and physician self-referrals, hospitals and physicians are encouraged to find ways to collaborate more effectively, she said.

“I think doing business on the financial side is keeping your doors open, and being a 24-hour community safety net is the other (side),” she said. “If Via Christi and other hospitals across the country think these business moves help them keep their doors open to the community, then more power to them.”

The deal follows months of speculation within Wichita’s health care industry. Officials at both hospitals had denied negotiations were taking place.

“The stock answer at the time was doctors would never give up control,” said Lynn Jeane, Kansas Heart’s chief operating officer. “Well, they didn’t.”

In 1997, Via Christi was set to pay 40 percent of Kansas Heart’s $10 million startup cost and sell an 81/2-acre site for the 47,000-square-foot facility. A group of about 30 physicians, led by cardiologist Gregory Duick and cardiothoracic surgeon Badr Idbeis, was to provide the rest.

At the time, Idbeis said he expected Kansas Heart to operate with profit margins five to six times higher than Via Christi’s. Via Christi administrators said then that the heart hospital would have a “significant” effect on their own income and that there was no community need for it.

Kansas Heart opened in February 1999.

Duick, Kansas Heart’s chairman, said in a statement that the partnership will be transparent to patients of the 54-bed investor-owned specialty hospital.

“Via Christi’s purchase of a minority share won’t affect our day-to-day operations,” he said. “We’ll continue to compete and to be in charge of what we do best – providing outstanding cardiac care to our patients.”