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Health Care

NHRMC Issue Draws Outside Attention

By Vicky Janowski, posted Feb 7, 2020
The State Employees Association of North Carolina ran a television ad last month (shown above) criticizing NHRMC that drew a sharp rebuke from some county commissioners and hospital trustees.
While very much a local issue, what to do with New Hanover Regional Medical Center is gaining attention from the state level.
 
The decision on any ownership or management overhaul of the county- owned New Hanover Regional Medical Center rests with hospital trustees and county commissioners, but it is possible that state officials could get called in depending on what’s decided.
 
The Partnership Advisory Group, 21 people selected from hospital trustees, NHRMC medical staff and the community, recently developed and sent out an RFP to see who is interested in buying or managing New Hanover County Regional Medical Center.
 
As it waits for proposals to come back – the RFP was sent to more than 25 organizations in mid-January – the group plans to spend its upcoming meetings looking at what it would take to keep NHRMC as a stand-alone health system while also addressing some of its limitations as a county-owned facility.
 
One idea the Partnership Advisory Group is looking at is to restructure NHRMC as a regional health system by creating a new parent corporation, a plan dubbed SystemCo.
 
Another is to establish NHRMC as a hospital authority, with the county-owned hospital assets transferred to that authority.
 
And another is to convert NHRMC from a public nonprofit health system to a private community nonprofit corporation, meaning it would be a community general hospital no longer under the county.
 
The discussions about the hospital’s future have caught the attention of State Treasurer Dale Folwell, who in his role over the State Health Plan has been a vocal critic of the possibility of a hospital sale.
 
“What problem are they trying to solve?” he said. “We have a legal responsibility to those that teach, those that protect and those that otherwise serve state government to take advantage of our buying power and to seek out institutions that have high-quality, accessibility, low cost and are profitable.”
 
The State Health Plan covers more than 720,000 state employees, teachers, retirees and dependents.
 
The coverage plan includes nearly 9,500 members in New Hanover County, and it paid more than 14,000 claims at NHRMC in 2018, totaling nearly $37 million, according to the treasurer’s office. Folwell said he thinks that amount will come in over $40 million for last year.
 
Overall, 41,000 State Health Plan members live in NHRMC’s seven- county service area.
 
Because of those numbers, Folwell sees the State Health Plan as a major customer for NHRMC, which is why he said he also spoke at a meeting last month of the Save Our Hospital group, a group that formed to oppose a sale or merger agreement.
 
Though not specifically a campaign video, a recent TV ad from the State Employees Association of North Carolina supporting Folwell’s Clear Pricing Project on health care costs for the state plan weighed in on the NHRMC issue.
 
Knocking NHRMC as one of the hospitals that didn’t sign on to Folwell’s Clear Pricing Project (only a handful of hospitals in the state agreed to), the ad says NHRMC instead wants to focus on selling to an out-of-state, for-profit corporation.
 
“The NHRMC Partnership Advisory Group, working on behalf of the New Hanover County Board of Commissioners and NHRMC Board of Trustees, is deliberately and openly working through the process of evaluating all options for the system, including remaining independent, restructuring, and/or partnering with another organization,” wrote county commissioners chair Julia Olson-Boseman and hospital trustees chair Jason Thompson in a joint letter to the association. “No decision or recommendation has been made. Yet, your organization is running a commercial in the Wilmington market claiming there is a plan to sell to a for-profit health system. This is a clear effort to distort a local issue to advance your political agenda.”
 
“The county commission chair is claiming that we’re misleading the public and trying to advance some sort of political agenda, but the fact is this issue is not about politics, it’s about people … We stand behind every word in those advertisements,” said Robert Broome, executive director of the State Employees Association of North Carolina, who added that Folwell was not involved in the making of the ad.
 
“Why isn’t anyone asking them why they aren’t making a statement about the Clear Pricing Project,” Broome said. “And our ask is very simple. We are calling on county commissioners to direct the hospital to join the Clear Pricing Project. The Clear Pricing Project will make health care costs transparent. It was going to save money for thousands of state employees, teachers and taxpayers.”
 
When asked about his reaction to the ad, Folwell did not comment.
 
As state treasurer, Folwell, a Republican who previously served in the state House, also has a role in the bonds the hospital issues since it is county-owned and local governments have to get approval from the state to incur debt.
 
“Part of my other responsibilities is that I’m the chair of the Local Government Commission, and the Local Government Commission under previous treasurers has issued $330 million worth of debt on that facility,” he said, referring to NHRMC.
 
State Attorney General Josh Stein also would be called in under any deal that converts the nonprofit NHRMC to a for-profit hospital, like he did last year with HCA Healthcare’s purchase of Mission Health in Asheville.
 
NHRMC officials say there are a number of problems they’re trying to solve through potential changes, even if it means not involving an outside health system, with one being constraints on bond projects and debt capacity.
 
“We do not have the ability to get a project outside of New Hanover County,” NHRMC President and CEO John Gizdic said, pointing to the inability to use bond financing on projects in other counties because of the system’s unique structure. “And so, you look at the potential to build a replacement facility in Pender County. That could be tens of millions of dollars. Well, right now given our structure, the only way we could do that is take that out of our savings account, out of cash, which would deplete our days cash on hand, which could negatively impact our bond rating, and you start that vicious negative cycle.”
 
Matt Leatherman, a Democrat on the primary ballot next month for state treasurer, said he thinks one solution to address working across county boundaries could be regionalism – an approach being looked at in some parts of the state with water and sewer system mergers.
 
Leatherman, who also said he is not in favor of a sale of NHRMC, said he thinks the treasurer’s office should take a more active role to help NHRMC figure out its bonds dilemma.
 
At any rate, health care is expected to be a leading issue throughout this election year, from the local to the national campaigns.
 
“It’s bigger than this one race,” Leatherman said.
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