Children’s, Inova form new group of pediatric specialists in Northern Virginia

Correction: Due to incorrect information provided by officials, an earlier version of this story had a different listing of the five pediatric specialties that will be provided by the new organization.

February 28, 2013

Children’s National Medical Center and Inova Health, two of the Washington area’s largest health systems, are forming a new organization to give families in Northern Virginia more direct access to doctors who treat specialized children’s illnesses, including cancer, genetic disorders and bone problems, officials said.

The joint venture, among only a few of its kind in the nation, will be based in the Fairfax County and Falls Church region and open to patients this fall. It is aimed at giving young families living in one of the fastest-growing areas of the country more convenient access to a scarce resource: pediatric specialists.

An estimated 2.5 million people live in the immediate area that would be served by these doctors, and a high percentage are children, according to Knox Singleton, chief executive of Inova Health. About 25,000 babies are delivered at Inova hospitals every year.

“That’s 25,000 babies we’re introducing into this population a year,” he said. “We think there will be tremendous demand for these services. We envision a lot of growth in the future.”

Nationally, there aren’t enough pediatric specialists to meet demand, and that imbalance is more pronounced in Northern Virginia than in many other communities, officials said. The Inova system provides some pediatric services but lacks the depth and expertise of specialists at Children’s.

The Inova Fair Oaks Hospital in Virginia. (Courtesy Inova)

“What we found is the sweet spot where we focus together to take a crack at this need in a very innovative way,” said Kurt Newman, chief executive of Children’s Hospital, which is based in the District and is the only hospital in the Mid-Atlantic offering children-only care. The two health systems have been in talks for the past 18 months.

The joint venture is part of a wave of consolidation and affiliation rippling through the health-care industry locally and nationally. Under financial pressure to cut costs and improve the quality of care, health systems are pursuing new collaborations. The Children’s-Inova collaboration is unusual, experts say, because it involves a separate entity that will have its own governance and own cadre of doctors.

“This free-standing third party is somewhat unique,” said Brad Spielman, a vice president and senior analyst for Moody’s who follows the nonprofit health-care sector. He said he knew of only one other similar collaboration: in Seattle, which began 15 years ago.

The new organization, Pediatric Specialists of Virginia, will have three locations in Fairfax and Falls Church neighborhoods and is expected to start seeing patients in September or October. Initially, it will be staffed by 30 to 40 physicians and treat children in five pediatric specialties: gastroenterology, orthopedics, nephrology, genetics and hematology/oncology. But the list of specialties is likely to grow as the organization expands.

The first group of doctors will mostly be specialists from Children’s and Inova. Patients could also have more access to clinical trials run by the two health systems.

Over time, the practice could expand to include treatment of mental health and chronic conditions such as diabetes and asthma, Newman said. The genetic expertise might also be used as predictive medicine to help inform parents before birth, he said.

“It’s a great opportunity to work with the pediatric communities and health systems at large to improve that continuum of care,” he said.

It’s also likely to be a good business decision for both health systems, experts said. Singleton and Newman did not provide details about the financial arrangements or projected revenue. Each health system invested $10 million in the venture. Both health systems are likely to benefit from referrals from the new practice.

In addition, the venture would allow Children’s, the region’s dominant player in pediatrics, to expand faster across the Potomac by teaming up with Inova, the dominant health system in Northern Virginia.

Northern Virginia is one of the most affluent regions in the country, with a lower mix of Medicaid patients compared with the District, said Bob Kocher, a former Obama health-policy adviser who is now a partner in a venture capital company that invests in health-care companies.

Because of Inova’s market power, partnering with Inova gives Children’s “higher reimbursements from the insurance companies than they would on their own,” Kocher said.

For Inova, having access to these pediatric specialists also makes its health-care plan more appealing to consumers, experts said.

Then there is the simple convenience factor.

“Maybe there are some illnesses where fighting traffic is exactly the right answer,” said John Deane, an executive with the Advisory Board Company division that provides management consulting to health systems, referring to the trademark congestion that characterizes the drive between Northern Virginia and downtown Washington.

“For a young family in Northern Virginia, this gives them peace of mind without the hassle of driving to D.C.,” Kocher said. “The downside is that it will probably cost more money than driving to D.C. because they will likely have higher prices than Children’s will have in D.C.”

A source close to the negotiations said both parties expect to offer more cost-effective care.

Lena H. Sun is a national reporter for The Washington Post, focusing on health.
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