Health Care

Chamber Audience Hears Hospital Pitch

By Vicky Janowski, posted Aug 1, 2019
If not now, then eventually.
That was one of the messages from New Hanover Regional Medical Center President and CEO John Gizdic and New Hanover County Manager Chris Coudriet on Thursday about industry conditions driving the discussion around potentially selling the county-owned hospital to a larger health system.
“It is a question we will be asking at some point. I would much rather do it now from a position of strength,” Gizdic said, referencing NHRMC’s solid financial footing.
The two officials talked to about 30 people from a variety of local businesses and industries at the Wilmington Chamber of Commerce.
Coudriet and Gizdic on July 23 announced the idea to explore selling the county-owned hospital.
“Change is difficult. Asking hard questions isn’t always fun, but if we don’t do that we’re going to get what happens versus making something happen,” Gizdic said.
The first procedural step is slated to come Sept. 3 when New Hanover County commissioners vote on a “Resolution of Intent to Sell,” a phrase outlined in the state law that governs how local governments can lease or sell their hospitals.
If approved – and three of the five commissioners have voiced support for the move – a request for proposals would go out.
Last year, NHRMC’s operating revenue surpassed $1.1 billion and is forecast for more than $1.2 billion this fiscal year.
The system’s potential price tag would not be known until offers  come back, but Gizdic has said they could be “in the hundreds of millions of dollars, potentially up to a billion-dollar range.”
While Gizdic and Coudriet on Thursday outlined points about the potential benefits of finding a buyer – such as making sure the county is off the hook in the future if hospital revenues decline or finding a larger system with the means to invest in additional services and facilities down the road beyond what NHRMC can afford – they also made a point to emphasize that a sale is not a foregone conclusion.
“No decision has been made, and if the resolution is passed, nobody should believe that that is the decision to sell the hospital,” Coudriet said. “That is far from where we are. We are following the statutory process that has very specific language.”
That state statute, Coudriet pointed out, also outlines the public hearing and public RFP review process that would happen. That state law also addresses requirements for continuing similar services in areas such obstetrics, pediatrics and emergency treatment as well as indigent care (see state law info below).
Officials have said that if the process continues with negotiations, choosing a new owner – steps that also would require commissioners’ approval – and executing an agreement could still more than a year.
While the county would get the bulk of any sales proceeds, the ability of those making offers to address certain priorities would be a key part of any discussions, Gizdic said.
He said that hospital officials and county staff would work together to prioritize how to evaluate RFP responses if a request for proposals is approved to go out. Those would include issues such as future services, employees, health equity in the community and costs, among other areas.
“As business leaders and employers, the cost of health care is important to you,” Gizdic said. “We want to help continue driving down the cost of care. How can a partner help us do that? It’s good for your business; it’s good for economic development.”
About 7,000 people work for the not-for-profit system, which is by far the region’s largest employer.
“The population is going to double,” Gizdic said about the region’s future. “You can assume health care is going to need to grow pretty dramatically to meet those needs. So if we invested a billion dollars in the past decade or so [in facilities and equipment], we know it’s going to be at least a billion dollars, if not more, that needs to be invested in our community in health care resources.”
Former hospital president and CEO Jack Barto, who attended Thursday’s meeting, said discussions over the possibility of selling are not new.
“There was going to be a period of time where the hospital needed to get outside of county ownership,” said Barto, who retired in 2017 and was succeeded by Gizdic. “The health care landscape three years ago was a heck of a lot clearer than it is today.

“To do this from a position of weakness in three to five years would almost be -- to not ask the question and analyze it would almost be … ignoring your fiduciary responsibility and your commitment. Because if we’re doing this from a position of weakness, the opportunities are just so dramatically different than they’re going to be now.”
The contract, Barto added, that would be able to be negotiated now “and the things that we're going to be able to get out of this because of where we are are going to be so dramatically different today than they are five years from now."

Correction: This version corrects the sentence – they also made a point to emphasize that a sale is not a foregone conclusion.

Upcoming forums

There are two upcoming community forums planned ahead of the Sept. 3 vote:
     • Aug. 19, 6-7:30 p.m. at the Northeast Regional Library, 1241 Military Cutoff Road
     • Aug. 20, 8:30-10 a.m., Senior Resource Center, 2222 S. College Road
The Greater Wilmington Business Journal also will host a Power Breakfast event Aug. 26 on the issue.

What state law says about services after a sale or lease:

131E-13. Lease or sale of hospital facilities to or from for-profit or nonprofit corporations or other business entities by municipalities and hospital authorities.
(a) A municipality or hospital authority as defined in G.S. 131E-16(14), may lease, sell, or convey any hospital facility, or part, to a corporation, foreign or domestic, authorized to do business in North Carolina, subject to these conditions, which shall be included in the lease, agreement of sale, or agreement of conveyance:
     (1) The corporation shall continue to provide the same or similar clinical hospital services to its patients in medical-surgery, obstetrics, pediatrics, outpatient and emergency treatment, including emergency services for the indigent, that the hospital facility provided prior to the lease, sale, or conveyance. These services may be terminated only as prescribed by Certificate of Need Law prescribed in Article 9 of Chapter 131E of the General Statutes, or, if Certificate of Need Law is inapplicable, by review procedure designed to guarantee public participation pursuant to rules adopted by the Secretary of the Department of Health and Human Services.
     (2) The corporation shall ensure that indigent care is available to the population of the municipality or area served by the hospital authority at levels related to need, as previously demonstrated and determined mutually by the municipality or hospital authority and the corporation.
     (3) The corporation shall not enact financial admission policies that have the effect of denying essential medical services or treatment solely because of a patient's immediate inability to pay for the services or treatment.
     (4) The corporation shall ensure that admission to and services of the facility are available to beneficiaries of governmental reimbursement programs (Medicaid/Medicare) without discrimination or preference because they are beneficiaries of those programs.
     (5) The corporation shall prepare an annual report that shows compliance with the requirements of the lease, sale, or conveyance.

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