Cooperative Agreement

Background

House Bill 2316, enacted by the 2015 General Assembly amended the Code of Virginia in order to address the unique healthcare challenges that exist in the Southwest Virginia community.  This Code section authorizes the State Health Commissioner to approve or deny an Application for a Cooperative Agreement following receipt of a recommendation for approval of the application by the Southwest Virginia Health Authority.  The cooperative agreement would authorize two or more hospitals from specified localities in Southwest Virginia to merge in order to provide improvements in the quality of health care, access to health care in rural areas of the Commonwealth, and enhance the probability that smaller hospitals in the Commonwealth may remain open in order to provide beneficial service to their community.  The approved cooperative agreement would immunize the merged entities from challenge or scrutiny under state and federal anti-trust laws.

Southwest Virginia Health Authority

In January 2016, the Southwest Virginia Health Authority adopted revised health goals for the region.

In February 2016, Mountain States Alliance and Wellmont Health System submitted an Application for a Letter Authorizing Cooperative Agreement to the Southwest Virginia Health Authority. The applicants also submitted to the Tennessee Department of Health an application for a certificate of public advantage.  On December 22, 2016, the Southwest Virginia Health Authority submitted a report to the Commissioner documenting the results of its review of the application and recommending approval of the application.  That recommendation initiated a 45-day period which the Commissioner had to issue a decision.

On September 22, 2017, the applicants submitted revised commitments to VDH.  On October 9, 2017, the applicants submitted further revised commitments to VDH.

On October 16, 2017, the Authority submitted to VDH the results of its review of the impact of the approval by Tennessee of the Terms of Certification Governing the Certificate of Public Advantage on the Authority’s earlier recommendations and proposed commitments.

Request by the Virginia Department of Health for Additional Information

The Virginia Department of Health has made two requests for additional/supplemental information from the applicants.  The applicants are in the process of responding to those requests by providing a combination of non-proprietary and proprietary information.  Those requests, and the non-proprietary responses thereto, can be seen by clicking here.

Extension for Decision on the Application for Cooperative Agreement

The Commissioner received a request from the applicants on February 3, 2017 to delay a decision on the application for cooperative agreement between Mountain States Health Alliance and Wellmont Health System to allow for additional time to review the record.  In accordance with 12VAC5-221-90(B), the Commissioner approved the request.  The new deadline to render a decision on the application was no later than June 15, 2017, provided that the Tennessee application was deemed complete by March 1, 2017, and that all information deemed necessary to make the decision had been received by the Commissioner.

Tennessee did not deem the application to be complete by March 1, 2017. As a result, the applicants submitted an additional extension request to the Commissioner on March 10, 2017.  The Commissioner granted the additional extension request, establishing a new deadline for her decision by August 15, 2017, provided Tennessee deemed the application complete by May 1, 2017.

Tennessee did not deem the application to be complete by May 1, 2017. As a result, the applicants submitted an additional extension request to the Commissioner on April 28, 2017.  The Commissioner granted the additional extension request, establishing a new deadline for her decision by September 15, 2017, provided Tennessee deems the application complete by June 1, 2017.

Tennessee deemed the application complete on May 22, 2017.

Pursuant to the Commissioner’s September 1, 2017 request, the applicants requested an extension of time for her to make her decision until September 30, 2017. The Commissioner granted the request.

Tennessee approved the Certificate of Public Advantage on September 19, 2017.

The applicants submitted an additional extension request to the Commissioner on September 28, 2017.  The Commissioner granted the additional extension request, establishing a new deadline for her decision by October 30, 2017, provided that all information deemed necessary to a decision has been received by that date.

Meetings with the Applicants

The applicants met with the Commissioner, other staff from the Virginia Department of Health, staff from the Virginia Department of Medical Assistance Services, and staff from the Virginia Attorney General’s Office on May 17, 2017, August 8, 2017, and October 4, 2017.

VDH Staff Recommendations and Commissioner Decision

On October 23, 2017 the Office of the Attorney General provided the Commissioner with a consultation letter along with a copy of an economic analysis report prepared by Dr. Robert Town and Cornerstone Research.

On October 27, 2017 VDH staff recommended to the Commissioner that the application for cooperative agreement be approved with conditions. On October 30, 2017 the Commissioner issued an Order approving the application for cooperative agreement with conditions.  The cooperative agreement among hospitals and health systems should foster improvements in the quality of health care, moderate increases in cost, improve access to needed services, and enhance the likelihood that smaller hospitals in the region would remain open in beneficial service to their communities.

Active supervision of the cooperative agreement commences immediately.

Click here to see Public Comment