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When kids get really sick, they leave town. Does Richmond need a new children's hospital?


Christy Holton often must take her daughter, Harlie, who suffers from cranio-facial syndrome, heart defects and other serious ailments, out of Richmond to get the care she needs. - SCOTT ELMQUIST
  • Scott Elmquist
  • Christy Holton often must take her daughter, Harlie, who suffers from cranio-facial syndrome, heart defects and other serious ailments, out of Richmond to get the care she needs.

For a breakdown of the some of the key issues surrounding the children's hospital debate, click here.

On the Fourth of July, Harlie Caroline Holton will be in Boston recovering from her 33rd surgery. It will be an excruciatingly painful operation during which pins and rods are drilled into her jaw, with screws attached on the outside of her face. The process is known as bone distraction. Her jaw was underdeveloped at birth, so to grow it to a more normal size, surgeons cut it on both sides to allow new bone to come in behind it.

Holton, by the way, is 6 years old.

"So you re-break the bone, new bone grows. The next day you re-break it again, new bone grows. And you do that for six weeks," explains Harlie's mom, Christy Holton. "Every day we'll turn the screws. It's horrible."

Surgery No. 33 is horrible, but nowhere near the worst of it. Harlie Holton was born with a mass in her lungs that probably should have killed her and a heart that's essentially flipped around — the wrong chambers pump blood to the wrong places. She suffers from cranio-facial syndrome, hence the smaller jaw, is missing her left ear and ear canal, and has a misshapen skull. Most of her right lung has been removed. She's had five open heart surgeries, two tracheotomies, four jaw reconstructions and a spinal fusion.

And that's not even the abbreviated list.

The Holtons live in Glen Allen, in the Twin Hickory subdivision. Harlie has two brothers, Cooper, 4, and Murphy, 8, and a little pug named Rooney. Like the hole in the heart she was born with, whenever Harlie sets off for another surgery, the family is upended in ways that most people never have to experience. Her medical problems are so complex she needs the best-trained pediatric specialists, which often means traveling out of state.

Locally, Virginia Commonwealth University Medical Center typically is Harlie's best option. The VCU Medical Center has more specialists, and in an emergency its trauma doctors are hands down the best — there really isn't another place in Richmond the Holtons will take their daughter.

But when it comes to her complex surgeries, her parents say, VCU and its sister facility, the Children's Hospital of Richmond at VCU, just don't cut it.

"I like her doctors at MCV, I do, but they don't see patients like Harlie. But I go to Boston and Harlie is just one of several," her mom says, referring to Boston Children's Hospital, where Harlie will go for surgery July 3. "They see more complicated kids so they have more experience with complicated kids."

Of Harlie Holton's 32 surgeries, only three were performed in Richmond.


VCU Health System is building a $168 million children's pavilion to consolidate outpatient care at Marshall and Broad streets, which will complement the Children's Hospital of Richmond at VCU. - SCOTT ELMQUIST
  • Scott Elmquist
  • VCU Health System is building a $168 million children's pavilion to consolidate outpatient care at Marshall and Broad streets, which will complement the Children's Hospital of Richmond at VCU.

To be fair, Boston Children's Hospital is the best. In U.S. News & World Report's most recent rankings of the best pediatric hospitals in the country for 2012-'13, Boston Children's came in at No. 1.

The Children's Hospital of Richmond at VCU, the pediatric hospital that VCU refers to as "world renowned" and a "center of excellence," appears nowhere in the rankings. The magazine surveyed clinical data in 10 specialties from nearly 180 pediatric hospitals, and 150 pediatricians across the country. Eighty pediatric hospitals made the list, but not the one at VCU.

A debate is raging in Richmond about whether the community should support a new, independent, freestanding children's hospital, or rally behind the hospital at VCU.

The two camps break down something like this: Those who favor building an independently run children's hospital include a coalition of 250 or so pediatric doctors and specialists from across the region; Bon Secours Health System, which operates three major hospitals in metro Richmond; and a billionaire philanthropist and his wife. Those who don't support a new children's hospital in its current proposal include VCU Health System and HCA Healthcare, which operates the other three major hospitals in Richmond.

The Children's Hospital of Richmond at VCU - SCOTT ELMQUIST
  • Scott Elmquist
  • The Children's Hospital of Richmond at VCU

The push to build a free-standing children's hospital started in earnest more than a decade ago. The idea is fairly simple: Proponents say that consolidating the majority of pediatric medical care from the area's three major hospital systems into a freestanding hospital will fix a fragmented system and significantly increase patient volume at one place, allowing it to attract the best doctors in the country.

With the closest children's hospitals in Washington and Hampton Roads, a new one in Richmond likely would attract patients from across Central Virginia and elsewhere. Two feasibility studies by Atlanta-based Kurt Salmon in 2008 and 2012 find that the metro Richmond market has approximately 250,000 children. Within an hour's drive of the city, the market expands to 360,000 children. The conclusion is that the market is more than large enough to sustain a new children's hospital.

But the studies were completed on a key assumption — that all three hospital systems would forgo most of their pediatric patients, and beds, to the new facility. After crunching data supplied by HCA, VCU and Bon Secours, the consultants project that seven years after opening, a new 200-bed children's hospital could expect 8,500 inpatient discharges and 190,000 outpatient discharges. It would be profitable almost instantly.

Drs. Melissa Nelson and Ted Abernathy (below), with Pediatricians Associated to Care for Kids, say a new, free-standing children's hospital would attract the best doctors and ultimately lead to the best care for kids. - SCOTT ELMQUIST
  • Scott Elmquist
  • Drs. Melissa Nelson and Ted Abernathy (below), with Pediatricians Associated to Care for Kids, say a new, free-standing children's hospital would attract the best doctors and ultimately lead to the best care for kids.

By 2022, the hospital could generate $369 million in total inpatient and outpatient revenue, according to the 2012 study, with $41 million in net profit on an 11-percent margin.

Because the $500 million hospital would start with $150 million in philanthropic contributions, it would open with a considerable advantage — much-lower-than-average financing rates for the remainder of costs. Consultants say that gives it a solid foundation, "potentially mitigating the size of the reserve that will be needed in the early years of operation."

Sources tell Style Weekly that much of that $150 million would come from William H. Goodwin Jr., the billionaire investor and chairman of CCA Industries, and his wife, Alice.

Farzan Bharucha, a partner at Kurt Salmon and the consultant who spearheaded the Richmond study, addressed the feasibility issue at a town hall meeting in early February, attended by more than 350 people at St. Paul's Episcopal Church.

"There are about 250 children's hospitals around the country today," he said. "Roughly 55 of them are freestanding, independent children's hospitals. Last year, 52 of them were all profit-making, so they were sustainable long term. That's not an anomaly. That has been the case for years."

Among the cities that are the same size or smaller as Richmond's market of about 250,000 children, are Knoxville, Tenn.; Little Rock, Ark.; Dayton, Ohio; and Omaha, Neb., Bharucha said: "The discussions about whether you can support one, I think, should be put to rest."

Dr. Ted Abernathy of Pediatricians Associated to Care for Kids. - SCOTT ELMQUIST
  • Scott Elmquist
  • Dr. Ted Abernathy of Pediatricians Associated to Care for Kids.

VCU and HCA, however, say the proposal to build a new children's hospital is flawed. The proposal simply would lead to a duplication of pediatric services, they say. The three systems would keep some of their current pediatric services, for example, including their respective neonatal intensive care units, where newborns with serious medical problems go.

VCU officials also warn that children's hospitals across the country face a dubious economic future with changes looming because of the Affordable Care Act. And HCA officials express concern that a new hospital potentially could violate anti-trust laws.

"Expert pediatric care is already available at all three institutions," says Mark Foust, vice president of communications at HCA Virginia. "There is no demonstrated need for this facility, and it's not clear how it would lower cost or improve quality or access to care."

There are complex layers to the debate. Despite their resistance, both HCA and VCU have indicated that they haven't completely shut the door on the idea. And there's no question that those who support a new hospital desperately want to work with VCU Health System. After all, many of the pediatricians involved in the push trained at VCU.

"We all would want VCU to be our academic partner," says Dr. Melissa Nelson, who serves on the board of Pediatricians Associated to Care for Kids, or PACKids, the lobbying group for the free-standing hospital. "VCU should be the academic arm, and we should do our best to exhaust that possibility."


More than 350 people showed up for a forum on the proposed children's hospital in early February at St. Paul's Episcopal Church. - SCOTT ELMQUIST
  • Scott Elmquist
  • More than 350 people showed up for a forum on the proposed children's hospital in early February at St. Paul's Episcopal Church.

So is there really a need for an independent, freestanding children's hospital? And why not just build on the existing children's hospital affiliated with VCU on Brook Road?

That's the case that VCU's making. The university already has a facility, and is building a $168 million children's pavilion at 11th and Broad streets, across from VCU Medical Center.

All told, the university says by 2015 it will have invested $250 million in pediatric services in just the last seven years, and has attracted 140 pediatric specialists to improve care. According to that 2008 study by Kurt Salmon, VCU Medical Center's pediatric inpatient volume represents 24 percent of the market, more than any other single hospital in Richmond.

Sheldon M. Retchin, chief executive of VCU Health System, and John Duval, chief executive of MCV Hospitals and Clinics, communicated with university donors about the issue in early February. "Based on our own analyses, we believe that this model of an independent hospital is flawed and would threaten the sustainability of our pediatric clinical and academic missions," they wrote. "Thus, we have serious concerns about the viability of an independent hospital and cannot support this model."

While the university sees a new children's hospital as a threat, is it really because a new hospital isn't viable? And if VCU felt the assumptions in the studies were invalid, why did it participate?

The consultants brought in to study the feasibility of a new hospital were hired by the Commonwealth Fund and the Children's Hospital Foundation, the fundraising arm of the Brook Road facility and a close ally to VCU.

"When we were engaged, we were told that all of the systems had agreed to participate," Bharucha says, adding that all three hospital systems were "very forthcoming" and supplied their own lists of people to interview for the study. "We did not go out and solicit their participation."

Dr. Ted Abernathy, chairman of PACKids' board of directors, which was involved in the feasibility studies, says the understanding was that once the more recent study was completed in early 2012, all three hospital systems and the pediatricians would meet to hash out whether the project was a go.

"Everyone agreed at the start that we would do this study and at the end of the study there would be a retreat where we would all get in a room together and that was where we would make the decisions and argue it out," Abernathy says. "And at that point in time we were going to have the opportunity to finally, face-to-face, eyeball-to-eyeball, discuss what the study said. And VCU pulled out at the last minute and said, 'We can't.'"

That wasn't the case, according to Pamela Lepley, executive director of university relations at VCU. In answers to questions supplied by Style — the university declined to make hospital officials available for interviews — Lepley writes in an email that VCU "has remained at the table for any discussions regarding a hospital dedicated to children."


The Holtons — Tom, Cooper, Murphy, Harlie, Christy and Rooney — routinely must split up during Harlie's major surgeries, which often are out of state. - SCOTT ELMQUIST
  • Scott Elmquist
  • The Holtons — Tom, Cooper, Murphy, Harlie, Christy and Rooney — routinely must split up during Harlie's major surgeries, which often are out of state.

Financial questions are a chief reason behind VCU's concerns about a new hospital.

The Children's Hospital of Richmond at VCU technically loses money. Last year, the hospital facility off Brook Road lost $3.5 million on $25.7 million in net patient revenue. The year before, it lost $2.4 million on $26.3 million in net patient revenue.

But that's only a small fraction of the pediatric revenue that VCU brings in each year. Because VCU isn't required to break out the numbers publicly, and declined to supply the data to Style, it's difficult to know for sure. But consultant Bharucha says it's typical that pediatric patients account for about 10 percent to 15 percent of total revenues for adult hospital systems.

Last year, VCU's hospital system brought in $1.8 billion in net patient revenues, with an operating margin of $121 million. Using the consultant's formula, pediatric revenues at VCU are at least $108 million, with net revenues somewhere north of $10 million.

But that doesn't represent how much VCU would be required to give up to the proposed hospital. For example, all three systems would keep their neonatal intensive care units, or NICUs, and newborns with "low complexity" medical problems would remain at their respective hospitals. Maternity wards and NICUs are big profit centers, but they'd stay. The goal is to move the higher-complexity cases — which are decidedly less lucrative to the hospital because their medical care is far more expensive — to the new facility.

"Why I understand Sheldon saying that 'we rely on pediatric revenue," Bharucha says of VCU Health System Chief Executive Sheldon Retchin, "I don't understand why he thinks VCU wouldn't be viable without it."

Rather, Bharucha says, VCU would benefit more than the other hospital systems because it's the teaching institution. With the expected higher volumes of pediatric patients and more complex cases, he says the new children's hospital would qualify for considerable academic research money.

"All of the research dollars would flow there," Bharucha says. "I think if there were a free-standing children's hospital, and all the entities would agree to play, I think that VCU would have the most to gain."

Among the myriad obstacles and issues of concern are changes looming with the Affordable Care Act — especially as it relates to government reimbursements for underinsured patients. VCU Health System serves a large indigent population. There's also the location of the proposed hospital. If it's in the suburbs, for example, how would VCU's bus-dependent patients get there?

Ted Abernathy, chairman of PACKids, says such issues are easy to fix with shuttle buses. And as for the changes to government reimbursements, which VCU says makes the new hospital a dicey proposition at best, that's no worse than what adult hospitals already are facing.

There's also the elephant in the room — the Goodwins — and the $150 million in philanthropy the new hospital would generate before the doors even open.

The clock is ticking. Bill Goodwin has grown increasingly frustrated with the leadership at VCU Health System, sources tell Style, and he may decide to abandon the dream of a VCU-anchored children's hospital.

That could mean a couple of things: Without the philanthropic support, VCU and HCA seem likely to further distance themselves from the project. Bon Secours and the coalition of pediatric doctors, meanwhile, could decide to find another academic partner and build the new hospital anyway.

Finding another academic partner that isn't VCU may not be such a stretch.

In February 2011, Bon Secours called a meeting with local pediatricians at the Country Club of Virginia to discuss the possibility at a "pediatric summit," Dr. Nelson recalls. Talks between all three hospital systems had broken down, the pediatricians were told, and Bon Secours was exploring partnering with the University of Virginia Medical Center. And there was this gift from a "generous family in Richmond that saw this tremendous need."

"We were under the impression that failed attempts in the past were because we wouldn't have the money to build it. And suddenly we realized it's financially feasible, given this gift," Nelson recalls. "The other issue ... in explaining to us the inability to find common ground between the three hospital systems, they were going to move forward with the project anyhow."

Abernathy says the idea that the hospital would be built without VCU as the academic partner didn't sit well with the pediatric community. He points to San Antonio, which had a similar breakdown in communication.

"Three hospital systems couldn't get together. Everything's going great and all of a sudden one of them pulled out and it looked like everything fell apart," Abernathy explains. "Vanguard Health Systems came in and said we'll help you build that hospital. And CHOP [Children's Hospital of Philadelphia] came in and said we'll run it. Now San Antonio is going to get a full service, free-standing, independent children's hospital that is going to be run by CHOP out of Pennsylvania and an outside entity. Now that's crazy. And I would, all of us would, have a very, very, very hard time with that."

Could something similar happen in Richmond? It's possible. Bon Secours confirms that the hospital system had discussions with U.Va., and Goodwin is a graduate of its Darden School of Business, and recently was reappointed to the university's board of visitors.

"We did discuss it," says William Lennarz, chief medical officer of pediatrics at Bon Secours Virginia Health System, in written response to questions from Style. "At the same time the philanthropic leader of this project requested that we support his vision for a community wide single facility. We agreed and we have kept our promise to work with him and continue to support his vision."

Goodwin says the children's hospital is a dream that he and his wife have harbored for a long time. He sees the children's hospital as something that could become his and his wife's legacy. He's already given $75 million to VCU, and millions of dollars more to dozens of nonprofits across the region and beyond. But this is different.

"I'm human. I can dream," Goodwin says. "I would love to see Richmond have something that is really world-class."

The Holton family never really had the option to stay in Richmond, particularly for Harlie's major surgeries. And settling on Boston Children's Hospital for her upcoming jaw distraction surgery, despite the expense, was a no-brainer. For her jaw reconstruction surgery last year, the Holtons spent $10,000 flying back and forth to Boston.

"Boston is tied to Harvard Dental. And they have a whole team, where they have an oral surgeon, a plastic surgeon and a micro surgeon and cardiology backup. So I knew I would get everything in Boston," Christy Holton says.

It's also the little things. Unlike general hospitals that cater to adults, Boston Children's understands how to make children and their parents feel comfortable, says Tom Holton, Harlie's dad. When you're forced to uproot for a week at a time, if not longer, for surgery that likely will be among the most stressful periods in a family's life, the little things matter.

"My complaint about every hospital we've been to, and God knows we've been to plenty of them, is never the doctor. Never. It's always the facility," Tom Holton says. "You walk into Boston, there is this big giant ball thing in the middle of the lobby. And you walk in there and every kid is like, shhuunnk, and they could watch it for hours, and it's just playful, and everything's colorful, and there are fish tanks everywhere, and the security guys are like, 'You, come on,' because they're just used to kids in wheelchairs and it's the norm up there."

Those little things can come only from a hospital geared toward children and children alone, the Holtons say. While VCU is top-notch, they say, it just isn't the same.

"I will say they are trying. But if they're claiming to be a full-service children's hospital, they're not. They are not like a freestanding building where you can get everything you need," Christy Holton says. "Maybe they will improve. But, obviously, they are not good enough for us." S

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