Health Care

OPINION: Novant Promises Need To Be Guaranteed

By Gene Merritt, posted Jul 15, 2020
My organization, Save Our Hospital Inc., was disappointed by the recent decision of the New Hanover County Commissioners to sell our hospital to Novant.
Since day one of this process, we have been concerned about the secrecy and lack of transparency demonstrated by the county and the hospital. We felt the process was and is “backwards.” And, as we have seen, most of the information available to the public has been “after the fact.”
There has been no realistic conversation.
To our credit, however, I think we have been a positive force in creating a much more inclusive evaluation process than was originally planned. I think it is realistic to assume that without our involvement, the PAG would not exist in the form it is today. Our primary arguments have never been with the PAG per se, rather with the county and the hospital administration.
I think the PAG, despite some members with obvious conflicts of interest, has done a good job working with the information provided to them. I think they honestly feel that their work was meaningful and important. I cannot disagree. Who knows what would have happened if the PAG did not exist?
On the other hand, most all the decisions of the PAG were guided by the NHRMC strategic plan, a document few people have seen – and certainly not the public. Representatives of the hospital say it is a competitive document and must be viewed only by a few. Which begs the question, “Why does a publicly owned organization have a secret plan in the first place?” With no competition, what is NHRMC concerned about?
Regarding the offer on the table, or any offer, the devil is always in the details.
On first review, we see several concerns that need to be clarified to assure a reasonably fair deal for the people of New Hanover County and Southeastern North Carolina.
And we have questions.
In reviewing Novant’s most recent financial statements, we find that their current reserves amount to less than they are offering for the hospital. Since they obviously cannot spend all their reserves – harmful to their credit and bond ratings – it appears they must borrow the money to purchase NHRMC.
That means the loan will have to be repaid. That means they must create revenues significant to pay the debt service, operating expenses, and make a profit. Typically, in any business, that means increasing revenues and cutting expenses. Prices are easy to increase when you are a monopoly.
The other major issue with the Novant offer is their proposal to spend around $3 billion in future capital needs as prescribed by the strategic plan. Realizing that all future capital expenditures – in any organization – must be justified by real needs, the decision to cover those costs will be made in Winston-Salem (Novant corporate administration).
Therefore, how do we know they will make these expenditures? And are these projected expenditures realistic in the first place? Are they a wish list? We – the public – have been given no justification for the details of the strategic plan. No wonder we are skeptical.
It is true, in my view, that $1.25 billion can generate foundation income that could really do some good in our community. The critical question regarding the establishment of a foundation is to whom will the board of trustees be accountable?
I call on the PAG, while they are still assembled, to make every effort to make certain that the Novant promises are guaranteed and that the employees of NHRMC will be treated with fairness, dignity and respect.
Monopoly is the enemy of free-enterprise capitalism. NHRMC is a monopoly, but at least it is indirectly accountable to the public of New Hanover County, or shall we say it is a benevolent monopoly. When, and if, the hospital is sold, that accountability will be gone forever. I find it difficult to believe that the bottom-line driven Novant organization will be as benevolent. I hope I am wrong.
Our extensive research indicates that hospital mergers and acquisitions typically create loss of jobs, higher prices, fewer choices and loss of local control. I fear those outcomes will be present in Wilmington down the road. Again, I hope I am wrong. In a few years, after the dust settles, what will the health care industry look like in our area?
Considering potentially major changes to the health care system nationwide, and considering the dynamics of the current pandemic, why are we pushing so hard to sell our hospital? Should we not wait for a year or so, or until these questions are answered before we sell?
Whatever happens, I will try to deal with it in a dignified manner. But one thing is certain to me – the way this process has been handled by the county and the hospital has created a great deal of distrust and concern. Despite the efforts of the hospital and Novant to spend hundreds of thousands of dollars to convince us this is a good idea, this mistrust will not go away any time soon.
In the final analysis, as a loyal member of this community, I remain hopeful that whatever happens will work out for the best.
Gene Merritt is president of the Save Our Hospital group.
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