A bill to help several rural hospitals makes quick passage through both legislative chambers and is on its way to the governor for his signature.

By Rose Hoban

A bill that emerged only in the last weeks of the almost nine-month legislative session would throw a lifeline to two troubled rural hospitals, in Belhaven and Yadkinville, while changing the status of Western North Carolina’s largest hospital system.

One concern cited by Vidant officials is the proximity of Pungo Hospital to the water's edge and a possibility of flooding.
Pungo Hospital in Belhaven. Photo credit: Hyun Namkoong

Belhaven has been the scene of a bitter and much-publicized fight over the fate of Pungo Hospital, which, after years of operating in the red and being purchased by Vidant Health in 2011, closed last year.

Belhaven Mayor Adam O’Neal, a Republican, first drew national attention in 2014 by courting Democrats and the leadership of the North Carolina NAACP in his fight to reopen Pungo, then making a walk to Washington, D.C. to draw attention to his town’s plight.

More recently, O’Neal has thrown his support behind long-standing efforts by statehouse Republicans to eliminate North Carolina’s certificate of need system, a suite of regulations intended to reduce the development of too many medical resources.

The bill, Senate Bill 698, includes provisions to grant Belhaven an exception to the certificate of need process in re-opening the hospital.

As the amended version, HB 20, hit the House floor Monday, O’Neal again became a lightning rod for controversy, even in his absence, when Rep. Frank Iler (R-Oak Island) criticized O’Neal’s plan to revive the hospital.

“Both Hyde and Beaufort [counties], by unanimous or overwhelming margins, have refused to loan money to the town of Belhaven to pursue with eminent domain proceedings to seize the old hospital property,” Iler said, noting that the limited liability corporation that would run the new hospital is headed by O’Neal. “When the facility was closed in July 2014, the average visits per day was four, and it was $1.5 million in debt.”

Iler also praised Vidant’s efforts to replace the hospital.

On Tuesday afternoon, people from Belhaven drove to the General Assembly to press for passage of a bill to facilitate the reopening of their hospital. Car shows a coffin on the roof that's labeled "It's a matter of life and death."
On Tuesday afternoon, people from Belhaven drove to the General Assembly to press for passage of a bill to facilitate the reopening of their hospital. Photo credit: Rose Hoban

Vidant officials have declined to comment on the particulars of the Belhaven situation, citing a lawsuit filed by O’Neal and the Belhaven town council. The system is in the process of building a $5 million multi-specialty clinic in the town that will be open around the clock and employ 52 people. That facility is slated to open in June 2016.

“This is the 21st-century health care model, not the 1950s model,” Iler said. “In addition, Beaufort and Hyde counties are expanding and upgrading their EMS facilities to paramedic level, and Vidant has actually given $500,000 to Beaufort County to upgrade their EMS facilities.”

Rep. Paul Tine (I-Kitty Hawk) told his colleagues the bill was not a panacea for the problems in Belhaven.

“This does not give Belhaven their hospital back,” Tine maintained. “They still have to go through licensure, they have to obtain the property from an LLC, they have to show sustainability, USDA loan requirements still need to be met, they have to deal with the appeals process on [certificate of need], compete against a multi-million dollar facility that Vidant has put in and deal with flood plain issues.”

To date, the town of Belhaven has budgeted more than $400,000 in lobbying and litigation costs in an attempt to reopen the hospital, much of which has been paid for by the old hospital’s foundation.

In July, O’Neal told the town council there would be a need to raise taxes, a move he blamed on Vidant closing the hospital.

Ending Mission’s COPA

Another change to HB 20 would eliminate a “Certificate of Public Advantage” that has limited growth by Mission Health, the largest hospital chain in Western North Carolina since merging with the former St. Joseph’s Hospital in 1995.

The Mission COPA caps the system’s overall profit margin and its inpatient and outpatient hospital costs. In addition, the regulation limits Mission’s ability to employ more than 20 percent of local doctors, increasingly a disadvantage, as many hospitals now acquire physician practices to position themselves economically in response to the changes driven by federal health care reform.

In 2012, a heated battle was waged over the continuation of the COPA, which Mission’s leaders wanted terminated while the system’s competitors have sought to keep it in place.

When the bill was introduced last week, it would have eliminated the COPA within months, something opposed by officials at Park Ridge Hospital in Hendersonville.

Hendersonville Rep. Chuck McGrady (R) made it known he was against ending the COPA and said he’d oppose the bill on the floor.

But by Tuesday, a compromise seems to have been hammered out in the form of an amendment to the bill that sunsets the COPA in January 2018.

When introducing the bill in the Senate, Sen. Ralph Hise (R-Spruce Pine) described the COPA as having “long outlived its usefulness.”

Several other small provisions were also included in the bill:

  • A provision that prevents  hospitals looking for new owners from having to repeat the entire public hearing/request for proposals process if one buyer falls through and another is sought. This provision will largely benefit the closed hospital in Yadkinville.
  • A provision that makes it easier for hospitals to expand and operate across state lines.

The measure passed the House on Monday evening on a vote of 102-8 and had an easy final passage in the Senate on Tuesday afternoon.

When senators gave final approval to the bill, a crowd of people who had driven to the capitol from Belhaven broke into applause.

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