Prince William Health System Seals $240 Million Merger Deal With Novant

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By Jennifer Buske
Washington Post Staff Writer
Sunday, July 5, 2009

The Prince William Health System finalized its merger plans Wednesday with North Carolina-based Novant Health, securing an additional $240 million for the Manassas hospital.

"Through this exciting partnership, Prince William Health System will take our delivery of quality health care to the next level," said Michael J. Schwartz, Prince William Health System's president and chief executive. "We are pleased to have achieved this milestone for growth."

Prince William health officials said they needed a financial partner to meet the demands of a growing bedroom community. The company, which has served the county since 1964, originally tried to merge with Inova Health System, Northern Virginia's largest hospital chain. That potential partnership dissolved because of antitrust concerns raised by the Federal Trade Commission.

The hospital's merger announcement came less than a week after Potomac Hospital signed a letter of intent to join Norfolk-based Sentara Healthcare. Potomac Hospital officials would not disclose how much funding Sentara is committing to the Woodbridge-based facility.

The money Novant has pledged to the Prince William Health System will be used to add staff -- as many as 50 physician specialists -- and create additional private rooms, a cardiac catheterization lab and a 60-bed hospital in Haymarket. Hospital officials expect the western end of Prince William to grow nearly 20 percent in the next two years, necessitating the addition of hospital beds in that portion of the county, officials from the nonprofit health system said.

As part of the merger agreement, the Prince William Health System will retain its name and identity and will continue to be governed by a local board of trustees, hospital officials said. They said a Novant representative will be added to the Prince William board and a Prince William representative will be added to Novant's board.

All donations made to the Prince William Health System Foundation will remain in the community.

Prince William Health System officials said they knew several years ago that a partnership was necessary to gain access to capital and keep the organization afloat. The only government funding the hospital system gets is through Medicare and Medicaid, programs that have taken hits in recent years.

Officials studied 20 potential partners before settling on Novant. Schwartz said the Prince William Health System board selected Novant because it has the same "mission, vision and values."

With a net revenue of $3 billion, Novant supports more than 1,000 physicians -- compared with the Prince William system's 130 -- who practice in more than 300 locations in North and South Carolina.


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