Baltimore's big medical rivals are going into business together.
The Johns Hopkins Health System and the University of Maryland Medical System have agreed to co-own Mount Washington Pediatric Hospital, which UMMS has held through a subsidiary since 2000. It is the first time the two institutions will share ownership of a facility, and Johns Hopkins is paying $3 million for the opportunity.
The two institutions have long sent patients to the pediatric hospital, which helps chronically ill children who need long-term care or rehabilitation. The deal turns an informal relationship into a formal one and ensures that Johns Hopkins will continue to play a role in the hospital.
"If either one of us were to own Mount Washington and decide to sell it to somebody else, it would do harm to the other one," said Edmond F. Notebaert, president and chief executive of the University of Maryland Medical System. "This merger of interests really eliminates that. It's a statement -- it's a very positive statement -- about the two institutions. We want to do the right thing for the right reason, as opposed to compete in a way that does harm to the other party or to the patient."
It's a 50-50 partnership, and he's not ruling out the idea of more deals someday. "It opens the door to the possibility of that happening in other areas," he said.
The medical systems are key players in town. They own the state's largest hospitals -- University of Maryland Medical Center on Baltimore's west side and Johns Hopkins Hospital on the east side -- and are among the largest employers in Maryland.
And make no mistake, they are competitive, said Nancy Fiedler, spokeswoman for the Maryland Hospital Association. But she said it makes sense to cooperate on long-term pediatric care, a very small and specialized market, so one doesn't have to duplicate what the other is doing.
This sort of co-ownership is not a first nationally, but it is not common, said Jonathan P. Weiner, a professor at the Johns Hopkins Bloomberg School of Public Health.
"It is fairly unusual for two medical school systems to share a facility," he said. "That's not to say they shouldn't -- there's certainly plenty of need."
Fiedler called the arrangement "unique" for Maryland.
Notebaert said it grew out of discussions he had about the hospital with Ronald R. Peterson, president of the Johns Hopkins Health System. "It seemed like a natural," Notebaert said.
That is because Johns Hopkins has a vested interest in the pediatric hospital's health. Insurance companies don't pay for chronic care at acute-care hospitals, so Johns Hopkins sends those patients to Mount Washington, said Dr. George J. Dover, chairman of the department of pediatrics at the Johns Hopkins University School of Medicine.
And for more than 30 years, "we've provided medical supervision out there," he said of the Mount Washington hospital. Dr. Richard M. Katz, the pediatric hospital's medical director, is a faculty member in Dover's department.
"Although it was a completely separate private institution, it was an institution that has always been very valuable to us," Dover said.
Johns Hopkins worried that its involvement would be jeopardized if the University of Maryland ever sold the hospital, in part or in total, he said. That's why it was eager to step in.
"Mount Washington is an essential component of any full-delivery system for children," Dover said.
Founded in 1922, the 102-bed pediatric and rehabilitation hospital provides outpatient as well as inpatient care, treating children with diseases and disorders ranging from obesity to seizures to sickle-cell anemia.
The care is expensive, and the population that needs it is small.
"Hospitals like Mount Washington ... around the country have had a difficult time surviving financially, and while their services are very important to the children who have need [of] them, they've usually gone out of business or been folded into other organizations," Notebaert said. He sees the shared ownership as a way to "guarantee its existence for the state of Maryland."
Dover said the hospital struggled financially before it was merged into what was then North Arundel Hospital, now Baltimore Washington Medical Center. The medical center merged into University of Maryland Medical System six years ago.
Mount Washington is in the black now, UMMS said. The hospital brought in $33.9 million in revenue in fiscal year 2004, according to the most recent report to the Internal Revenue Service.