When the New Hanover County commissioners voted earlier this month against entering into a management contract between New Hanover Regional Medical Center and Carolinas Health Care System, it raised some eyebrows and some questions.

The deal, which would have placed NHRMC under the management of Charlotte-based CHCS, was expected to save the hospital an estimated $18 to $20 million per year.

CHCS manages dozens of hospitals in the Carolinas, which gives it the kind of buying power to help hold down costs.

Still, commissioners Jason Thompson, Ted Davis, Rick Catlin and Brian Berger voted down the proposed agreement. Only Chairman Jonathan Barfield, who also sits on the hospital’s board of trustees, voted in favor of the plan.

Under terms of the proposed 10-year agreement, NHRMC would have joined CHCS’s network of 33 affiliated hospitals across North and South Carolina. Jack Barto, CEO of NHRMC, and other senior staff members would have been absorbed by CHCS.

According to Martha Harlan, director of public relations and marketing for NHRMC, the proposed agreement would have had a long-lasting positive impact on the hospital.

“Joining CHCS would have allowed us to collaborate on best practices with 33 other hospitals and more than 1,700 physicians,”  she said.

Barfield focused on the projected cost savings.

“Carolinas Health is a large organization with a lot of buying power, so we would have been able to save a lot of money based on the economy of scale,” he said.

But those cost savings, as beneficial as they appear, were a sticking point for Catlin.
“What happens to the bottom line after the agreement has ended,” Catlin asked. “They’re estimating $18-20 million in savings every year, but are they also saying that we’d have an anchor of $18-20 million when the deal is over? That was one of my big concerns.”

Catlin wasn’t the only commissioner to raise questions about the savings. For Davis, the concern over the proposed savings was rolled into his concerns about the level of control CHCS would have over NHRMC. According to Barfield, NHRMC would have maintained local control, but the issue still raised doubts for Davis.

“CHCS was going to come in and take most of NHRMC under their control,” he said. “Our hospital would have become dependent on cost savings provided by joining such a powerful network, but where do those savings go when CHCS wants the whole hospital and the county refuses their offer? Do they pull out entirely, leaving an $18-20 million dollar burden on the budget? More importantly, do they take our senior management with them?”

According to Catlin, “It felt like a slow-motion sale of the hospital.”

Harlan insisted the proposed deal was “not a sale, not a lease, only a management agreement.”

But Davis and Thompson sided with Catlin, and Thompson’s  objections went deeper.

“My main objection with this deal was CHCS,” he said. “The more I read and discovered about their dealings with other hospitals across the state, the less I liked what they had to say.”

He said many questions he raised in public and closed sessions with CHCS were avoided.

“They deflected some questions and with others they lied to my face. I asked CHCS about a specific incident and they told me ‘I don’t know what you’re talking about,’” Thompson said, referring to a dispute between CHCS and a hospital in Wake County. “When I showed them the newspaper articles I was referencing, their only answer was ‘Oh, that.’ I don’t appreciate that type of dishonesty.”

New Hanover County Manager Bruce Shell noted that despite the objections, two of the dissenting commissioners said they were open to explore further options.

“Once CHCS can provide satisfactory answers, then I think we’ll reassess the need to move forward on a management agreement,” Catlin said.