LifePoint, Duke to build hospital network

Partnership will buy, manage or JV with community hospitals

LifePoint Hospitals has formed a joint venture with Duke University Health System to assemble a network of hospitals in the North Carolina region.

DLP Healthcare LLC, referred to as Duke/LifePoint, will look at acquisitions, long-term leases and joint ventures with community hospitals. It’s already got a memorandum of understanding for the latter arrangement with 102-bed Maria Parham Medical Center in Henderson, N.C.

Jone Koford, president of strategic growth and development for LifePoint, said Duke/LifePoint doesn’t have a target number of hospitals for its network and declined to say how the Brentwood hospital system and academic medical center will share in any profits. She said the idea is to provide options for community hospitals looking in need of additional clinical and operational resources.

“Many hospitals have approached us or approached Duke already, and this is to give them the best of both worlds — access to the resources and expertise and reputation of Duke, along with the great operational excellence of LifePoint coming together to support those hospitals in these challenging times,” Koford said.

The Duke/LifePoint venture grew out of a relationship the organizations built around cardiovascular service lines at LifePoint’s Danville Regional Medical Center in Virginia.  

Avondale Partners analyst Kemp Dolliver said the joint-venture model has been used by Triad Hospitals (now part of Community Health Systems) and LHP Hospital Partners. It can be an attractive structure to community hospitals and, having a medical center partner like Duke could prove helpful to LifePoint in negotiating with health plans, he said.

In the case of Maria Parham Medical Center, Duke/LifePoint will take an 80 percent ownership stake in the nonprofit hospital and share equally in its governance with MPMC. The proceeds form the deal will eliminate the hospital’s debt and its remaining $30 million of assets would create a charitable fund to support new programs and services in the hospital’s community.

MPMC would gain economies of scale, management expertise, assistance with physician recruiting and financial support through the deal. A definitive partnership agreement is expected to be finalized in April, and the North Carolina Attorney General would have to sign off on it.

In a statement, Duke Executive Vice President William J. Fulkerson said his organization is "pleased to become LifePoint’s programmatic, safety, quality and clinical service development partner and believe that Duke/LifePoint offers an attractive option for community hospitals.”

LifePoint (Ticker: LPNT) operates 52 hospital campuses in 17 states. Duke University Health System is comprised of Duke University Hospital, Durham Regional Hospital, Duke Raleigh Hospital and an extensive network of ambulatory facilities. It has 11 hospital affiliations for cardiovascular services, 15 for cancer services and two for neonatology.