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Health Care

Post-sale, Changes Underway At NHRMC

By Neil Cotiaux and Vicky Janowski, posted Feb 5, 2021
With a historic transfer of ownership Feb.1, New Hanover Regional Medical Center ended nearly 53 years as a county-owned hospital and became part of Winston-Salem-based Novant Health.
 
Signs and banners on the NHRMC campus marked Day One of the union of the two hospital systems, but no large-scale event was held in keeping with pandemic-related restrictions. NHRMC names and logos will continue to be used until a final decision is made on branding, officials with NHRMC and Novant Health said.
 
As with most acquisitions, some operational changes will occur over time, but it was mostly business as usual on the NHRMC campus on Monday for the Wilmington-based system’s 7,500 employees.
 
“Today has to be the most exciting time in our history, and it’s not just me. You know this is exciting for our patients and our community because this really gives us the opportunity to do so much more for our region,” said John Gizdic, who greeted hospital employees Monday morning sporting a Novant pullover.
 
Gizdic, president and CEO of NHRMC, now absorbs the title of president of the Novant Health greater Eastern market, as Novant establishes a hub in this part of the state.
 
Novant Health, a not-for-profit health system, operates a network of hospitals, physician clinics and outpatient facilities across North Carolina, South Carolina, Georgia and Virginia.
 
It already operated Novant Health Brunswick Medical Center, which now falls under the structure of NHRMC.
 
The nearly $2 billion purchase – as well as additional commitments for future capital investments and agreement with UNC’s expanding medical program at NHRMC – sets Novant up to significantly grow its presence in Southeastern North Carolina.
 
“We will invest a lot in the community, but we want to make sure we’re prioritizing, what physicians, team members, the local board and the local management team advises to start with,” Novant CEO Carl Armato said.
 
Integration will take time, Gizdic said, adding “you want to do this very thoughtfully and make sure we do this appropriately.”
 
While a number of details still need to be worked out, there also are many decisions already made.
 
NHRMC’s agreement to manage Pender Memorial Hospital, for example, has been extended an additional two years over the current term.
 
“We are expanding our pediatric specialties,” Gizdic also said, “and we’ll be getting those in place over the coming months, as well as new clinical research opportunities that are launching in the very near future. A lot of exciting things that are starting, but a lot more to come.”
 
One group of hospital patients did, however, experience immediate change.
 

Charity Care

 
As of Feb. 1, Novant’s purchase of NHRMC widened the scope of charity care available to individuals facing financial difficulties, raising the qualification level for such care from 200% of the federal poverty level to 300% as Novant’s more liberal policy took hold.
 
The federal government’s 2021 poverty level is set at $26,500 for a family of four. Novant’s 300% ceiling for charity care means that families of four with an income of up to $79,500 and no health insurance are eligible for the program’s 100% write-off, as long as they meet requirements that include a lack of substantial cash-on-hand and receiving only medically-necessary services.
 
According to July 2019 U.S. Census Bureau estimates, 11.7% of New Hanover County residents under the age of 65 had no health insurance.  
 

Jobs and Benefits  

 
The agreement to buy NHRMC enshrined Novant’s pledge to retain all of the Wilmington system’s employees at the time of closing for a minimum of two years “at their then-current salaries, job title, reporting structure and responsibil­ities.”  
 
“The Asset Purchase Agreement provides stability for NHRMC employees by maintaining current position and salary for at least two years,” NHRMC spokesman Julian March said. “These offers have al­ready been extended.”  
 
NHRMC’s hourly workers will continue to receive a $12.50 wage but will transition to Novant Health’s $15 per-hour minimum within the first 100 days of closing.  
 
As for benefits, some will remain while others will change over time.  
 
“Novant Health is assuming many of the employee benefits plans currently provided by NHRMC, including the medical, dental and vision plans and the 403(b) Retire­ment Savings Plan,” a Novant Health spokesperson said. “The main exception will be that Novant Health will not be assuming the NHRMC pension plan, since that plan can only be maintained by a governmen­tal entity.”  
 
The Wilmington system’s pension plan and 457(b) tax-advantaged sav­ings plan in which eligible NHRMC employees participated are no longer available to associates as of closing, March said. But Novant Health will implement a new non-governmental 457(b) plan for eligible team mem­bers.  
 
“All earned pension funds are se­cure and will be available to staff and retirees through their retirements,” March said, with a $200 million employee resiliency fund built into the sales agreement and most of that fund going toward pensions.  
 
NHRMC team members will transition to Novant’s health and wellness plans next Jan. 1 or later, March said.  
 

New Hanover Community Endowment

 
While N.C. Attorney General Josh Stein did not object to the hospital sale, he negotiated conditions that largely affected New Hanover Com­munity Endowment, the independent philanthropic foundation created with an infusion of $1.25 billion of sale proceeds.  
 
Strengthened community repre­sentation is being put in place across the endowment’s organizational structure, a topic that was discussed by the foundation’s board on Jan. 28.  
 
Stein called on the board to create two additional seats to be filled with individuals conversant in public health, underserved populations or racial equity and justice; to increase from two to four the number of annual public disclosures on grants and other distributions; to hold at least two listening sessions for public input on how the endowment should distribute funds; and to form a com­munity advisory committee.  
 
Selecting the new board members is the foundation’s first priority, said Spence Broadhurst, the board’s chair.
 
“We are committed to a relatively quick turnaround because we want to get these two board members on board and fully engaged very quickly as we continue to reach out to the public,” he said.  
 
Broadhurst said the foundation will accept both third-party nomina­tions and self-nominations but that all nominees must be residents of New Hanover County and have ex­pertise in one of the three categories mentioned by Stein.  
 
Prior to the hospital sale’s Feb. 1 closing, the board established three committees: an investment commit­tee chaired by Bill Cameron to help determine the financial adviser who should manage the $1.25 billion from which earnings will be drawn and grants will be made; a personnel and search committee chaired by Sted­man Stevens to recommend a recruit­ing firm and find the endowment’s CEO; and a governance committee chaired by Hannah Gage that will help shape the group’s organizational structure.  
 
Cameron is co-founder of Cam­eron Management, Stevens is CEO of VU Systems and Gage is a past UNC Board of Governors chair.  
 
Additional commitments made by Novant Health as part of the hospi­tal deal include more than $3 billion for strategic master plan projects and routine capital expenses, $300 million for a county revenue stabi­lization fund and $50 million for a Mental and Behavioral Health and Substance Use Disorder Treatment Fund.  
Editor Vicky Janowski contributed to this article.
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