By Liora Engel-Smith
Update: Josh Stein Okayed the sale on Jan 22, 2021.
The biggest county-owned hospital system in the state is about to change hands, pending review by North Carolina Attorney General Josh Stein. If approved, the sale is expected to be finalized early next year, the hospital said in the statement.
In a historic 4-1 vote earlier this week, the New Hanover County Board of Commissioners decided to sell New Hanover Regional Medical Center and its facilities to Novant Health, under an agreement that would net the county roughly $2 billion. The majority of these proceeds — roughly $1.25 billion — will be invested in an independent endowment intended to benefit the county. The favorable vote comes on the heels of similar votes by the hospital board of trustees and the Partnership Advisory Group, a body appointed to study the system’s future.
Officials from Novant and the New Hanover Regional health system said on Tuesday that they are confident Stein will OK the transaction because of the benefits to the region. Stein similarly gave the green light to the sale of the Asheville-based Mission Health system to HCA in 2019, with some stipulations.
“This is a long-term investment for Novant Health,” said Carl Armato, who heads the Charlotte-based system, a nonprofit, in contrast with HCA, a for-profit company that took over Mission Health. “This is not like we’ve got to meet a shareholder quarterly return. You’ll see us investing in mobile care clinics … to take care of those in need.”
Preparations for the eventual transition have already begun, with New Hanover CEO John Gizdic heading that effort.
The decision to sell the county’s biggest asset has been met with fierce public rhetoric about local control and health care costs. Even as county officials prepared to approve the sale on Monday afternoon, detractors and supporters of the transaction gathered outside the old courthouse in downtown Wilmington with signs that communicated opposing views.
But hospital officials have said the sale will strengthen medical services in Wilmington and the surrounding communities. Referring to a more than half a century legacy as a county-owned facility Monday night, hospital leader Gizdic said New Hanover Regional must adapt to a changing landscape.
“What got New Hanover Regional Medical Center through the last 50 years will not be enough to get us through the next 50 years,” he added.
Stein’s office, for its part, said in a statement Tuesday that he will review the transaction to ensure compliance with North Carolina law.
Monday night’s vote is the culmination of a more than year-long search for a suitor, which included proposals from some of the biggest health care players in the state and the region. The board of commissioners ultimately opted to go with Novant Health. Under the agreement with the Winston-Salem group, a partnership with UNC Health and the UNC School of Medicine will preserve the hospital’s existing residency program. Novant has vowed that the deal would strengthen medical education in Wilmington.
Novant has said in its proposal that it will turn New Hanover Regional into a hub, similar to its Charlotte facilities. Armato said on Tuesday that the exact vision for the hospital system will depend on the community needs, but that affordable and quality health care will be a priority.
The prospective sale is the latest in a wave of mergers and buyouts for hospitals in the state. Despite what has shaped up to be a trying fiscal year for hospital finances, the decision to sell New Hanover came from a position of financial strength.
New Hanover is somewhat unusual in the world of North Carolina’s hospitals: The largest system in the southern coastal region is situated in an area with many Medicare-insured seniors, fewer Medicaid enrollees than most other regions and even fewer self-pay, or uninsured, patients. That payer mix helped New Hanover Regional maintain a positive margin from operations before the coronavirus pandemic. That trajectory is likely to continue, especially as the region’s population grows in the coming decade.
As a result, the system was firmly in the black before it briefly suspended elective surgeries in light of the coronavirus pandemic, its financial statements show. The hospital reported a smaller-than-expected but still positive margin from operations for the period that ended March 31 of this year.
“It’s about securing quality health care that every single person needs and deserves now and for the future,” said Board of Commissioners Chair Julia Olson-Boseman on Monday night. “It’s about changing our community for the better.”
The board’s 4-1 vote was met with applause from the audience that gathered in the old courthouse. As news of the hospital system’s new fate spread, Save Our Hospital, a nonprofit group opposing the sale took to Facebook.
“ … [T]his debacle will not stand,” the Monday night post said. “The good citizens will have the last word.”