ST. PETERSBURG — All Children's Hospital, an 83-year-old community institution, is joining one of the most prestigious national names in health care in an effort to expand research and doctor-training opportunities in the Tampa Bay area.
In a deal announced Tuesday, All Children's in St. Petersburg will become part of Baltimore's Johns Hopkins Health System through an arrangement expected to be finalized by year end.
The unique agreement between the two nonprofit health organizations is a first for both. It also will be the first expansion beyond Maryland for Johns Hopkins, whose medical faculty has won 20 Nobel Prizes and whose namesake hospital has been rated tops in the nation for the past 20 years.
No money is changing hands, and Florida residents will remain a majority on All Children's governing board, ensuring local control, hospital officials said.
Leadership, staffing and day-to-day operations of the hospital will remain unchanged. So will the institution's name, though a tagline will added: "a member of Johns Hopkins Medicine."
All money raised locally for All Children's, long a popular cause among area philanthropists, will remain in the Tampa Bay area.
Meanwhile, All Children's, which gets 70 percent of its revenue from Medicaid, gains a powerful ally at a time when government reimbursements are being cut, and health care is in flux. Though All Children's typically posts a surplus, its operating income has been under pressure recently from costs involved with its new $400 million facility, which opened earlier this year.
Johns Hopkins, which has four hospitals, four surgery centers and 25 outpatient sites, is a $5 billion system. Under the agreement, Johns Hopkins will assume ultimate financial responsibility for All Children's, which had about $500 million in assets as of Sept. 30, 2008, the most recent financial filing.
Gary Carnes, president and chief executive of All Children's Health System since 2001, said it was not immediate financial pressures but rather a long-term perspective that led to the union.
"I'm convinced that no matter what happens in health care, we're better together than alone," he said. "We will be jointly raising the bar to provide the highest level of health care."
Steven Thompson, a senior vice president at Johns Hopkins Medicine, praised All Children's patient services but said it was lacking a strong educational and research component.
"It has been a long-standing objective of All Children's to become an academic children's hospital. That's the business Hopkins is in," Thompson said. "As we got to know each other better, it was clear there were great opportunities."
Officials added that the move gives Johns Hopkins a presence in Florida, a "potentially important new market … not only for patients in the region but also for Central and South America and the Caribbean."
The partnership will be launched with Dr. Jonathan Ellen joining All Children's as head of a new Johns Hopkins pediatrics department based in St. Petersburg. He will develop the residency and fellowship programs that will bring graduates of Johns Hopkins' medical school to train at All Children's starting in 2013.
Ellen also will help develop an expanded research program at All Children's, tapping on Johns Hopkins' expertise with clinical studies. The Baltimore institution has long been the biggest recipient of National Institutes of Health grants, pulling in $435 million last year.
"New discoveries actually happen quicker at academic hospitals," said Thompson, adding that All Children's patients and their families will have faster access to new and innovative treatments.
Though All Children's has existing doctor-training and research activities with the University of South Florida, Carnes said he did not expect any overlap between the programs.
"This is nothing against USF," said Carnes, who estimated there are the equivalent of 50 full-time USF residents at All Children's per year. "We were just trying to expand what we do."
USF spokesman Michael Hoad said the alliance "does not affect our educational affiliation."
"USF doesn't have a hospital and couldn't offer a hospital system affiliation (to All Children's)," Hoad said. "So there's nothing that the university or College of Medicine could offer to a hospital that's looking at its future during national changes in hospital finances. Bottom line: The era of independent hospitals is shifting dramatically."
Hoad said the union would help All Children's by allowing it to buy supplies, share back-office services and do joint insurance contracting through Johns Hopkins.
All Children's saw its operating income cut in half, to about $6.7 million, for the six months ending March 31, compared with the same period a year earlier. Carnes said this was mostly due to costs associated with the new hospital, including 200 new employees. Carnes said the hospital was ahead of where it expected to be financially, and inpatient admissions were up over a year ago.
While a handful of Johns Hopkins faculty and administrators will eventually work at All Children's, there won't be widespread exchange of either patients or physicians. Stressing that the focus of the collaboration will be on research and training, Carnes said, "Johns Hopkins was very impressed with our clinical program. There are very few things we are not able to do here."
Carnes and Arnie Stenberg Jr., All Children's chief administrative officer, first approached Johns Hopkins' administrators about three years ago to discuss a possible affiliation. Conversations steadily gained momentum, with executives taking turns flying to Baltimore or St. Petersburg. Johns Hopkins' officials were among the first to visit All Children's new hospital when it opened in January.
About six months ago, board members and senior managers exchanged visits and deemed the partnership idea, "very enticing," Carnes said.
Said Claudia Sokolowski, chairwoman of All Children's Health System board, "These people want to help us move health care into the next century. Who wouldn't be excited?"
All Children's hospital board will have four representatives from Johns Hopkins, but at least 75 percent of trustees will be local residents, with at least two from Pinellas County.
The board that oversees All Children's foundation, its fundraising arm, will be unchanged, but one Johns Hopkins' representative will be added.
Two All Children's representatives will join the 45-member Johns Hopkins Medicine board.
The agreement, which does not require state or federal government approval, was widely applauded.
Peter Young, a hospital consultant in Fort Myers, said All Children's, one of only two freestanding children's hospitals in the state, needs backing as it faces future Medicaid cuts.
"There's no question the Johns Hopkins brand is very powerful," he said. "It will attract a patient base.
"It's a tremendous opportunity for top-level institutions, and clearly Johns Hopkins is at the pinnacle nationwide and All Children's is at the pinnacle in Florida."
"It's huge," Mayor Bill Foster said. "It further puts St. Pete down on this international map for being a health care provider for children."
Times staff writers Richard Danielson and Letitia Stein and researcher Shirl Kennedy contributed to this report.