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Roper Defends Rex’s Record, Finances Before Legislators

UNC Health Care head Dr. Bill Roper had his day before the General Assembly Thursday, where he had a chance to present the case for keeping Raleigh’s Rex Hospital in the UNC Health Care system, instead of selling the institution to Raleigh-based WakeMed Hospital.

Hospital leaders at WakeMed offered to buy Rex last year; the UNC Hospital board of trustees said it wasn’t interested in a sale. The proposal, and it’s response, set off a public relations skirmish between the two hospitals that included newspaper and radio ads, blogs, and the suggestion that the General Assembly might end up requiring the sale via legislation.

Roper appeared in front of the House Select Committee on State-Owned Assets to answer to a series of questions presented by lawmakers last fall. WakeMed leader Bill Atkinson testified before the same committee in January

Lawmakers grilled Roper, who is CEO of UNC Hospital and Dean of the UNC School of Medicine, for the better part of an hour. At times, Roper’s testimony sounded like a lecture on health care economics, as he explained the current business environment of aggressive hospital consolidation, health system competition and the national trend of doctors becoming health system employees instead of private business owners.

“Doctors are choosing to become part of larger organizations,” Roper said. “More than half of physicians in America are now part of hospital or health care organizations instead of practicing on their own. And that number is going up. It’ll soon be 70 or 75 percent.”

Roper detailed financial arrangements with several hospitals owned or managed by UNC: Chatham Hospital in Siler City and Pardee Hospital in Hendersonville, as well as Rex. He made the point that Chatham Hospital was about $5.5 million in the red last year, an amount that had to be made up for by revenues from other hospitals in the UNC system.

Roper skirted the question of how much charity care Rex delivers by telling lawmakers the UNC Hospital system delivered more than $300 million in uncompensated care last year, out of an operating revenue of $2.2 billion. He said income from Rex has become integral to UNC’s financial stability.

One critique leveled against Rex by WakeMed officials is that Rex doesn’t do its ‘fair share’ of charity care in Raleigh.

“What Rex has allowed us is the capability to be seen as a major player in health care in this region,” Roper said. “That private income from paying customers is a major part of our financial success. That success has allowed us to then subsidize the academic side or our organization.”

Roper explained that since 1998, UNC’s School of Medicine has been joined with UNC Hospital, an arrangement that allowed a transfer of $106 million last year to the School of Medicine.

“Without Rex, the School of Medicine would have to rely more on the state for financial support,” he said.

Roper also defended UNC’s financial management by pointing out that the system received a $45 million subsidy from the state, and now that amount is down to $18 million.

“It is a great advantage,” Roper admitted in response to a question by Asheville Rep. Tim Moffitt. “But we do things for the state that no other hospitals do.”

Moffitt said he would suggest legislation to reduce the size of UNC Hospital’s board. Moffitt, a management consultant, said he believed UNC’s 22-member board was too large.

“We have rules in my side of the world about revamping governance to be effective,” Moffett said. “A dozen members is sufficient.”

The only time Roper appeared to become rattled by lawmaker’s questions was when Democratic Representative Michael Wray asked Roper about a quote attributed to him in an article in the Raleigh News and Observer last December.

Roper denied making the comment and cut off Representative Wray.

“We welcome WakeMed doing the important things it’s done in this community. We don’t seek bad things to happen at WakeMed, so the notion of grinding them into the dirt is just a foreign idea,” he said.

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