By Steven Pearlstein
Friday, October 12, 2007

One of the most successful businesses in the Washington area isn't technically a business at all -- it's a not-for-profit named Inova Health System. Over the past 40 years, what started out as a loose affiliation of three community hospitals in Fairfax County has transformed itself into the dominant provider of hospital and medical services in one of the richest and fastest growing regions of the country. And Inova's Fairfax facility has become the best hospital in the Washington region, with nationally ranked programs in treatment of cancer and digestive disorders, endocrinology, gynecology and heart surgery.

Much of the credit for Inova's success goes to Knox Singleton, a soft-spoken, courtly Southerner who turns out to be one of the toughest, shrewdest and most ambitious business executives in the region. As chief executive over the past 23 years, he's bought up local competitors and cleverly used the legal, regulatory and political machinery to deny national hospital chains entry into the market. Now Singleton has visions of competing with the likes of the Mayo, Scripps or Cleveland clinics in attracting wealthy or interesting patients from all around the world.

Certainly it's a bold ambition that, even in the best of circumstances, will take a decade to pull off. And you can bet there are a number of other very fine hospitals around the country that have a similar strategy in mind. But with Inova generating more than $140 million a year in annual operating profit from nearly $2 billion in revenue, it is in a strong financial position to pull it off.

Inova's handicap, however, is that unlike other "destination" medical centers, it doesn't have a world-class research program or a full-blown medical education program that usually goes with it.

In terms of research, for example, Inova has been able to lure a couple of stars in recent years and hired a noted liver specialist, Zobair Younossi, to head a new department of research, which will be housed in a $25 million research and education building nearing completion. But so far, the research program is still painfully modest when compared with a Johns Hopkins or a Cedars-Sinai, with about $7 million in outside grants, contracts and gifts and $6 million provided by Inova itself.

In terms of education, Inova has for many years run a residency program that now offers postgraduate training to 600 doctors in a wide variety of specialties. In addition, there are about 600 medical students studying and training at Inova hospitals from the medical schools of Virginia Commonwealth, Georgetown and George Washington universities.

But from a reputation standpoint, this patchwork of independent and cooperative programs doesn't really put Inova on the map in terms of academic medicine. It does not offer classes in basic science and medical practice to first- and second-year students. And it does not have a core staff of doctors and scientists whose primary focus is teaching and research.

For Inova, this poses one of those chicken-and-egg challenges. Without top students and residents, it's hard to attract top researchers. And without top researchers, it's hard to attract top students and residents. Without either, Fairfax Hospital can't become the Mayo Clinic.

So far, Singleton has failed to convince any of the major medical schools in the region to set up a full-fledged program at Inova's Fairfax campus.

Competition is one factor: All of the schools already have primary affiliations with other hospitals that aren't particularly eager to help boost Inova's reputation.

Money is another: Tuition wouldn't even cover half the cost of educating medical students, and somebody has to make up the difference.

In the case of Inova's most likely partner, Virginia Commonwealth University, politics also comes into play: With the state facing a budget deficit, getting downstate legislators to finance a new medical school in Northern Virginia looks like a non-starter to VCU President Eugene Trani.

This is the sort of short-sighted approach to public investment and economic development we have come to expect from Virginia and its legislators.

Never mind that Northern Virginia, the engine of growth in the state, needs desperately to diversify out of government contracting.

Never mind that health services is the fastest-growing segment not only of the U.S. economy but also a global economy in which growing numbers of wealthy Asians, Latin Americans and Eastern Europeans will turn to American medicine when they are really sick.

And never mind that the National Institutes of Health and private foundations such as the Hughes Medical Institute are shifting millions of dollars in grant money to the kind of "translational research" that connects basic science with real-world cures -- research that is best conducted at respected hospitals like Inova with large patient populations and strong reputations for clinical care.

Indeed, this is such a good opportunity that Singleton is willing to consider having Inova go it alone by starting its own "boutique" medical school, much as Mayo and Cleveland Clinic have done. To my eye, it looks like a gamble worth taking, not just for Inova but for the region. And surely it would represent a better use of Singleton's talents, and Inova's considerable resources, than continuing to buy every hospital, clinic and laboratory between Arlington and Richmond.

Steven Pearlstein can be reached atpearlsteins@washpost.com.