NC’s largest county-owned hospital weighs a potential sale - North Carolina Health News
By Liora Engel-Smith
The hospital campus on Wilmington’s South 17th Street is teeming with activity. On a recent afternoon, golf carts ferried patients across the vast campus, which includes a plethora of buildings with imposing names: surgical pavilion, cancer center and emergency trauma center.
New Hanover Regional Medical Center serves six counties. At 647 beds, as of the state’s last count, it’s also the largest county-owned hospital in North Carolina.
But last month, the county signaled that may soon change.
The New Hanover County commissioners, by a vote of 3-2, passed an “intent to sell” resolution at a Sept. 16 meeting. County and hospital officials stressed that the resolution is about exploring a range of options for the medical institution’s future. Those options include remaining a nonprofit in county ownership or affiliating with a larger health care system. But they also haven’t ruled out an outright sale either.
“We will consider all models and all options,” said John Gizdic, who heads New Hanover Regional, at a meeting with the press earlier this month. “ … Staying the same or selling are not the only two options, those are the two ends of the spectrum and we will consider everything in between, including staying the same.”
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As it is, the system, which in addition to the South 17th Street campus also boasts an orthopedic hospital and has a number of free-standing facilities throughout the region, cannot adequately serve the community, Gizdic argued. Population shifts in the county, and particularly in the city of Wilmington, have resulted in a groundswell of demand for services at New Hanover Regional. Just two years ago, New Hanover Regional performed roughly 35,000 surgeries, Gizdic said. Now, that number is roughly 42,000. There have been similar increases in other areas of service, including emergency department visits, he added.
And though these trends brought more money to the hospital — in the year that ended Sept. 30 2018, the hospital was firmly in the black with an operating margin of just under $82 million — Gizdic said the hospital can’t meet all of the community’s needs. The hospital needs to scale up its stroke services to better meet the demands of the growing retiree population in the region. It would need to replace aging buildings and support less profitable, but needed services, such as pediatrics. These and other laundry list items would necessitate an investment of roughly a billion dollars over a decade, he said.
In Gizdic’s telling, New Hanover Regional needs more resources than it has and exploring a partnership “from a position of strength” is the answer.
A dying breed
New Hanover Regional isn’t the first hospital to seek a future outside of county ownership. County hospitals were more common even a decade ago, but many facilities in the state have changed hands. Counties, it seems, are getting out of the hospital business. According to a recent count by the N.C. Healthcare Association, 11 county hospitals, including New Hanover Regional, remain in the entire state.
The trend holds nationwide too, said Ashish Jha, a Harvard University health economist. Originally a safety net for uninsured people, county-run hospitals became popular in the 1960s and 1970s, he added. With the advent of Medicare, Medicaid and the Affordable Care Act, the number of uninsured nationwide dropped dramatically, if unevenly.
“Running a hospital is complicated,” he said. “It’s becoming more and more expensive. There’s a lot of capital investment. And I think a lot of governments are just wondering whether it still makes financial sense for local government to be involved in running a hospital.”
But whether the future of New Hanover Regional is in county ownership or affiliation or sale to some yet unnamed entity remains to be seen. The intent to sell resolution stipulated the creation of an advisory group that will study the question and evaluate offers as they come in. The process, according to Gizdic, is likely to take well over a year and will involve opportunities for public input, with the final decision resting in the hands of the New Hanover County commissioners.
New Hanover Regional officials argued the exploration process has to happen now because of the shifts in the health care market, such as the move from fee-for-service insurance payment to so-called value-based payment, where providers get paid based on patients’ health outcomes. Some of these conditions, including Medicare and Medicaid reimbursement cuts and the state’s reluctance to expand Medicaid, are mentioned as risks for the hospital’s overall financial health in a 2017 bond document.
Many of the residents who spoke at a recent public hearing about the resolution rejected the exploration process altogether. Some even called for a county-wide referendum, rather than a Board of Commissioners vote.
“The taxpayers are the ones that own this facility not you and as such we should be the ones to decide what to do,” said Neal Shulman, a retired Wilmington resident. “ … This is our facility, this is our medical benefits, not yours.”
Less than two miles away, the Wilmington City Council approved a resolution that asked the commissioners to halt the request for proposals, a resolution that County Manager Chris Coudriet said the commissioners planned to ignore.
Joanne Donaghue, a retired health care executive from Brunswick County, said she didn’t support a sale. She said she wouldn’t be opposed to a partnership, not with another hospital system, but with a health information company that could help the hospital understand the cost of keeping residents healthy.
“The winners and losers in the future are gonna be those that will be able to have a clear understanding of the cost of health care related to outcomes,” she said. “ … Going to larger partners doesn’t necessarily address that issue.”
Another Brunswick County resident, Allie Reid, who works at the hospital, said New Hanover Regional’s reasons for seeking a partner made sense.
“I just hope that everybody can go into this with an open mind.”