Mission Hospital

Photo shows HCA Mission's campus from a distance, surrounded by mountains and trees

Profits up at HCA, ratings down at Mission

May 1, 2021 by Asheville Watchdog

Profits up at HCA, ratings down at Mission - North Carolina Health News

For executive pay, earnings matter more than quality of care

BY PETER H. LEWIS, Asheville Watchdog

HCA Healthcare, which owns and operates Mission Hospital in Asheville, reported this month that it made $1.4 billion in profits for the first three months of 2021, more than double the amount for the same period last year.

The new figures follow HCA’s report in February that annual profits rose to a record $3.8 billion in 2020, despite the pandemic, based on what the company called “solid cost management.”

In a proxy statement filed last month with the Securities and Exchange Commission, HCA stated its primary objective is “providing the highest quality health care to our patients, while making a positive impact on the communities in which we operate.” But it rewards top executives far more on meeting financial performance targets than on meeting quality of care metrics.

A year after announcing that its senior leaders would take 30 percent pay cuts during the pandemic, HCA reported last month that total compensation for its chief executive, Sam Hazen, rose nearly 12 percent, to $30.4 million in 2020. Total pay for other senior HCA executives also rose significantly during the pandemic.

Nancy Lindell, director of public and media relations for HCA Healthcare North Carolina Division and Mission Hospital, declined to break out the performance of HCA’s western North Carolina division or disclose the financial compensation for local hospital executives.

Profits up, ratings down

On Thursday, the Leapfrog Group downgraded Mission Hospital to a “B” rating in its Spring 2021 Hospital Safety Grade assessment, based on performance measures collected immediately prior to the onset of the COVID-19 pandemic.

The independent, nonprofit Leapfrog Group says its ratings reflect a hospital’s ability to protect patients from preventable errors, accidents, injuries, and infections. Mission received an “A” grade in the Fall 2020 Leapfrog assessment; it is unclear when the Fall 2020 data were collected.

A detailed breakdown of the Leapfrog grading system can be found here.

On Wednesday, the Centers for Medicare & Medicaid Services (CMS) also downgraded Mission Hospital’s overall rating, to four stars compared to five last year, and reported that patients gave Mission a three-star rating.

A map of HCA North Carolina Division hospitals Map courtesy HCA Mission

CMS uses a five-star quality rating system to measure the experiences Medicare beneficiaries have with their health plan and health care system. The latest ratings are based on data collected after HCA took over the Mission system.

CMS says “the overall star rating is based on how well a hospital performs across different areas of quality, such as treating heart attacks and pneumonia, readmission rates, and safety of care.”

“The patient survey rating measures patients’ experiences of their hospital care,” CMS says. “Recently discharged patients were asked about important topics like how well nurses and doctors communicated, how responsive hospital staff were to their needs, and the cleanliness and quietness of the hospital environment.”

Detailed ratings for the CMS grading can be found here.

Proxy statement confirms priorities

According to a formula included in the proxy report filed by HCA, the Nashville-based system calculates executive stock grants and bonuses — which typically exceed base salary — on a formula based 80 percent on financial performance and stockholder gains, and just 2o percent on meeting industry targets for quality of patient care.

The proxy statement also revealed that HCA’s board recommended against a shareholder proposal to increase the 20 percent weighting of quality of care on executive compensation.

The proposal “would not provide meaningful information to stockholders, would not be a good use of the company’s resources, and is unnecessary,” the HCA directors said in the proxy statement.

The Leapfrog Group’s Hospital Safety Grades for Asheville-area hospitals, Spring 2021 Chart from Leapfrog Group

National Nurses United, the labor union that represents nurses at Mission Hospital and 18 other HCA Healthcare facilities across the country, called HCA “the poster child of a corporate hospital chain that has prioritized profits above the needs of patients, nurses and health care workers.”

As a public company, HCA is required by law to prioritize making money for shareholders over other goals. Before HCA acquired it in 2019, Mission Health was a nonprofit corporation required to make quality of patient care the top priority.

HCA raised prices for most medical care by 10 percent soon after taking control of Mission, but it also achieved profit targets in part by reducing staffing, cutting other non-labor costs, and other “efficiencies.”

Mission earns accolades for care

Despite this week’s decline in ratings, Lindell, the HCA-Mission spokeswoman, said Mission continues to receive accolades, including recent recognition as a Top 50 Cardiovascular Hospital for the 15th time, and Magnet recognition for professionalism, teamwork and patient care.

The Magnet Recognition Program is operated by the American Nurses Credentialing Center, which allows nurses to recognize nursing excellence in other nurses.

Asked about the significant pay increases for Hazen and other top executives despite pledges that they cut their salaries, Lindell wrote in an email to Asheville Watchdog: “Last spring we announced that many leaders across HCA Healthcare were taking a reduction in salary until the height of the pandemic passed. It was during that period that hospitals across the country had canceled services and closed many areas within hospitals.”

In a letter to HCA employees, Hazen said he would donate 100 percent of his salary in April and May to the HCA Healthcare Hope Fund, which supports colleagues in times of natural disasters, illness, injury, or other hardships, Lindell wrote.

Other HCA senior executives took a 30 percent pay reduction, and top corporate, division, and hospital executives took 10- to 20 percent reductions, Lindell said. “As part of our efforts to protect our colleagues and their families, HCA Healthcare offered pandemic pay to those staff members who worked in areas of our hospitals that were closed due to the pandemic.”

HCA stock price has doubled during the pandemic, a windfall for investors and executives Chart courtesy Insider

According to its proxy statement, CEO Hazen’s 2020 base salary was reduced $109,010 as a result of HCA’s pledge to cut salaries during the pandemic. But because of stock grants, bonuses, and retirement benefits based in large part on cutting costs and hitting profit targets, his total compensation soared by more than $3.6 million in 2020.

HCA Healthcare last year returned to taxpayers the $6 billion in COVID-19 relief funds it received as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Physician and nurse departures

The reports of HCA’s record profits come as some Mission employees in the Asheville area complain of what they say is chronic understaffing and lack of adequate resources. As reported by WLOS-TV earlier this year, dozens of physicians have left HCA/Mission since the takeover. While some departing staff cited unhappiness with HCA management, it’s unknown how many of the departures were planned before HCA took over.

HCA-Mission has declined to give numbers for staffing before and after the sale, or to give details on staffing ratios, including the number of patients each nurse is required to assist.

Nashville-based HCA, which operates 186 hospitals in the United States and England, acquired Asheville’s Mission Health System in a $1.5 billion deal that closed Feb. 1, 2019. The background and details of the sale are still protected from public scrutiny by perpetual nondisclosure agreements approved by North Carolina Attorney General Josh Stein and Mission Health’s board of directors.

With its flagship hospital in Asheville, HCA’s North Carolina division includes seven hospitals and numerous clinics that serve 18 mostly rural counties in western North Carolina. It employs some 12,000 people.

Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. Peter H. Lewis is a former senior writer and editor at The New York Times. He can be reached at plewis@avlwatchog.org

A hospital main entrance is visible, with the words " New Hanover Regional Medical Center." The entrance is made of brick and there are cars and people under the brick canopy that leads to the main part of the hospital.

If this self-sufficient hospital cannot stand alone, can any public hospital survive?

April 3, 2021 by Kaiser Health News

If this self-sufficient hospital cannot stand alone, can any public hospital survive? - North Carolina Health News

In America’s health care system, dominated by hospital chain leviathans, New Hanover Regional Medical Center in Wilmington, North Carolina, is an anomaly. It is a publicly owned hospital that boasts good care at lower prices than most and still flourishes financially. Nonetheless, New Hanover County is selling the hospital to one of the state’s biggest health care systems.

Jordan Rau

Kaiser Health News

Nonetheless, New Hanover County is selling the hospital to one of the state’s biggest health care systems. The sale has stoked concerns locally that the change in ownership will raise fees, which would not only leave patients with bigger bills but also eventually filter down into higher health insurance premiums for Wilmington workers.

Hospital consolidation has been a consistent trend unabated by recessions, bountiful times or even a pandemic. The New Hanover sale, which requires only the approval of the state attorney general for completion, prompts the question: If Wilmington’s self-sufficient medical center cannot stand alone, can any public hospital avoid being subsumed into the large systems that economists say are helping propel the cost of American health care ever upward?

“We project the prices will go up, they’ll probably lay off employees after a couple of years, and the hospital will decline in terms of its quality,” said Dale Smith, a retired Wilmington businessman who opposed the sale. Applying his professional experience buying chemical companies to the hospital industry, Smith said: “A very large percentage of mergers and acquisitions, like 90 percent, never succeed in fulfilling their initial goals.”

The public hospital — those owned by counties, cities or other local government entities — is an increasingly endangered species, numbering 965 out of 5,198, according to the American Hospital Association. While the total number of hospitals in the nation dropped by 4 percent between 2008 and 2018, the number of state or local hospitals decreased by 14%.

Many have been absorbed by large systems. Over the previous 14 years, the percentage of markets where one health care system treats more than half the cases grew from 47 percent to 57 percent. In 2017, nine out of 10 hospital markets met the federal definition for being highly concentrated.

While the industry says larger systems allow hospitals to run more efficiently, numerous studies have found that charges to insurers and patients are higher from hospitals with more market power. One study calculated the premium to be 7 percent to 9 percent; another study found 12 percent.

“There is a growing consensus that hospital mergers do lead to higher prices,” said Christopher Whaley, a policy researcher at the Rand Corp., a research organization.

Novant and backers of the sale disagree that prices will increase more than they would have otherwise. “We looked into the future and we felt we needed more resources,” said Spence Broadhurst, who was the co-chair of the committee the county created to evaluate the medical center’s future. “We were pretty convinced that the risk of doing nothing was significant.”

While the coronavirus inflicted serious financial damage on many hospitals by forcing them to postpone elective surgeries and improve infection control, the outbreak has not stymied mergers and acquisitions. In the third quarter of 2020, Kaufman Hall, a Chicago firm that advises companies on such deals, identified four substantial health care transactions, tying the highest number the firm has seen in a single quarter.

“In 2021 and beyond, even more activity in M&A is expected,” said Anu Singh, a managing director at Kaufman Hall.

Consolidation has been marching rigorously through North Carolina. Seventy-four percent of North Carolina general hospitals belong to systems, more than any other state except Hawaii, Maine and Rhode Island, according to a KHN analysis of 2018 data from the federal Agency for Healthcare Research and Quality. Since then, in the western part of the state, the investor-owned chain HCA purchased the nonprofit Mission Hospital in Asheville; in the middle, Greensboro-based Cone Health merged with Sentara Healthcare into a 17-hospital system; and on the coast, Novant Health is buying New Hanover.

Both the Mission and New Hanover sales provoked substantial community blowback. New Hanover opened its doors in 1967, in the midst of the civil rights movement, as Wilmington’s first integrated hospital. It grew to become the nation’s third-largest county-owned hospital, serving seven counties in southeastern North Carolina.

But unlike many public hospitals, the medical center makes money: $110 million in the fiscal year ending in September 2019, which translated to an enviable 10 percent surplus. It is the largest county-owned system that does not require taxpayer subsidies.

Despite its market leverage as the only general hospital in Wilmington, New Hanover charged private insurers less than did the 24 other North Carolina hospitals for which Whaley and his Rand colleagues could assess inpatient and outpatient prices from 2016 through 2018. New Hanover’s prices were 13 percent lower than UNC Health’s, 15 percent lower than Novant Health’s and 32 percent lower than Atrium Health’s, according to the Rand data.

New Hanover has also demonstrated its ability to provide care to Medicare beneficiaries thriftily without sacrificing quality: In the first six months of 2019, its accountable care organization, or ACO, earned a $3 million bonus from Medicare for saving more money than the government expected, according to federal data. Novant’s ACO did not reduce costs enough to earn a bonus.

“This is not your typical county hospital. This is a fairly high-functioning hospital with high-quality care and reasonable prices,” said Barak Richman, a professor of business administration at Duke Law School.

But leaders in New Hanover County and the medical center announced in 2019 they were exploring either selling the hospital or joining a larger health care system. They said they feared the hospital needed more capital and help to keep up with the surging population growth in the region and medical advances, including costly technologies.

The county’s request for proposals drew many suitors, including Novant and Atrium, which had been battling for dominance throughout North Carolina’s regional health care markets. Novant’s winning bid, which the county accepted last October, will pay the county $1.5 billion. The county will use most of the money to fund a new nonprofit endowment to bolster community health but will keep $350 million. Novant pledged to invest an additional $3.1 billion to build and upgrade medical facilities and equipment in the region, and it said it would create a branch of the University of North Carolina School of Medicine at New Hanover.

“We knew we wanted more,” said John Gizdic, president and CEO of New Hanover. “We wanted to do more; we wanted to be more.”

Along with the hospital, the sale includes other medical facilities the county owns under the medical center’s umbrella: smaller hospitals for children, rehabilitation and mental health on the medical center’s campus; a nearby orthopedic hospital, a physicians’ group and outpatient centers; and its contract to manage Pender Memorial Hospital, owned by an adjacent county.

Carl Armato, Novant’s president and chief executive, noted in an interview that Novant already owns the nearby Brunswick Medical Center, which refers some patients to New Hanover and, he said, provides affordable health care. “The two organizations have a unique cultural alignment,” he said.

Even some opponents of the deal acknowledged that New Hanover was not guaranteed to remain financially strong. “Owning and running a hospital has got some serious wind in its face,” said Bertram Williams III, an investment adviser whose father was a surgeon who helped found New Hanover. “There’s a lot of things coming down the pike making it more and more complicated to manage a hospital and keep it above water.”

Williams said he expected Novant would need to recoup the money it is spending on the deal. “That money’s got to be repaid,” he said. “It’s going to come from local payers. We know it’s going to be higher costs, there’s no question about that. Might there be higher costs anyway? Probably.”

The sale of the medical center removes the direct leverage local consumers had in influencing the hospitals’ prices. Novant agreed to create a local hospital board, with a majority of members living in the service areas, but the board’s role will not extend to setting prices.

“Novant Health, what they’re proposing to do sounds just too good to be true,” said Howard Loving, a retired naval officer who questioned the sale. “To my mind, the first thing that’s going to unravel is there’s two years with the doctors who are there now, [and then] Novant will have the ability to decide who gets to stay and who gets to go.”

State Treasurer Dale Folwell said he expects that, as part of Novant, New Hanover will press for higher rates from the health care fund that covers state employees and teachers, which Folwell’s office oversees.

“I’m their largest customer,” he said. “I know we should expect quality to go down, access to go down, prices to go up. And when that happens, public service workers get hit the worst.”

Novant disputed that its takeover would lead to higher costs. “Novant Health has a track record of lowering the cost of care to patients compared to other healthcare systems in North Carolina,” the organization said in a statement. Novant also noted that more low-income people will qualify for free or lower-cost care under Novant’s charity care rules than under New Hanover’s.

Unpersuaded, opponents of the sale said the county did not take a serious enough look at finding other ways to raise capital without losing control of the hospital.

“They said the future is scary and unknown,” Smith, the retired businessman, said. “The counterargument is, Why don’t we wait and see what the future holds?”

“Once this is done,” he added, “you can never go back.”

shows the facade of one of Mission Hospital's buildings

Mission sale: Good for WNC, or just HCA?

November 27, 2020 by Asheville Watchdog

Mission sale: Good for WNC, or just HCA? - North Carolina Health News

Two locally managed hospitals both have sold in recent years. New Hanover Regional Medical Center, a smaller, less-profitable hospital netted twice the price of MIssion.

By Peter Lewis

AVL Watchdog

Years from now, the decision in 2018 by the directors of Mission Health to sell to HCA Healthcare might be seen as a brilliant strategic maneuver, one that guaranteed affordable, high-quality healthcare for future generations of western North Carolinians. This was, and still is, the position of the directors and executives who pushed the deal.

In return for giving up its independence, local control, and century-long legacy as a nonprofit providing quality care for the benefit of local residents, Mission accepted a $1.5 billion offer from HCA, the biggest hospital chain in the country. As a public company, HCA is required by law to prioritize profit-making for its shareholders.

The money from the sale was designated to fund a new nonprofit, the Asheville-based Dogwood Health Trust. Based on the relatively small population of the 18-county mountain region it serves, Dogwood overnight became not just the richest per capita health-related endowment in North Carolina, but in all of America.

Related story: Part 1: Mission’s leadership gave HCA an early advantage in search for a buyer.

But did the Mission directors — so eager to strike a deal with HCA that they gave it a head start, conferred with HCA executives before setting terms for other potential bidders, and invited only one still unnamed company besides HCA to make a formal proposal to the board — get the best possible deal for the communities Mission was formed to serve?

$5.1 billion for smaller hospital system

Much is still unknown about the Mission-HCA deal because the negotiations were conducted in secret, and Mission’s directors agreed to confidentiality restrictions that they say prevent them from discussing the sale even now, more than two years later.

In stark contrast, the recent courtship of not-for-profit New Hanover Regional Medical Center in Wilmington, N.C., was conducted in public with full transparency.

After a rigorous, nine-month process that included public meetings, escalating bids from six wealthy suitors, and all documents posted online for the public to examine, the New Hanover County Commissioners voted this summer to pursue a $2 billion cash offer from Novant Health of Winston-Salem, a nonprofit. The Novant deal also includes an additional $3.1 billion in spending commitments, for a total package of $5.1 billion.

That’s more than $3 billion higher than the total $1.923 billion package the Mission board accepted from HCA, which included $1.468 billion cash, $430 million in capital spending, and a $25 million donation to a healthcare innovation fund.

New Hanover received at least three bids that exceeded the price paid by HCA for Mission. Charlotte-based Atrium Health bid $2 billion cash up front for New Hanover Regional, with an additional $1.1 billion in spending commitments. Durham-based Duke Health offered at least $1.35 billion cash plus $1.9 billion in capital commitments, for a total package of $3.25 billion.

HCA Healthcare also submitted an offer that valued New Hanover Regional at $1.25 billion, but it was not selected as a finalist.

Novant, Atrium, and Duke Health did not respond to AVL Watchdog questions about whether they had been invited to make offers for Mission.

Mission ‘An attractive target’

By conventional metrics often used to evaluate healthcare deals, Mission appeared to be a more valuable prize than New Hanover.

At the time of the sale, Mission had six hospitals, 1,057 beds, 12,000 employees, $1.8 billion in total revenue in its latest fiscal year, and $180 million in earnings before interest, taxes, depreciation and amortization (EBITDA, a measure of a company’s overall financial profitability and performance). Mission commanded a near monopoly market share in Buncombe and the 17 other counties of Western North Carolina it serves.

New Hanover Regional, in comparison, has three hospitals, 855 beds, 7,400 employees, $1.2 billion in revenue for the latest fiscal year, and $111 million earnings, in a highly competitive market.

Experts in healthcare merger valuations contacted by AVL Watchdog stressed that it is difficult to compare the relative values of two different hospital groups in different markets and different years. Also, they noted, New Hanover Regional is in a faster-growing market and has a higher percentage of patients covered by private insurance, the most lucrative source of revenue for hospitals.

The so-called payer mix for Mission was, and still is, less favorable. People in Western North Carolina are older, poorer, and sicker than state and national averages. A majority of Mission’s patients are either uninsured or covered by Medicare and Medicaid, neither of which reimburse the hospital the full cost of care.

Even so, Mission was a very attractive target, Alan Levine, chief executive of Ballad Health, a $2 billion healthcare system based in Johnson, Tenn., told Business North Carolina at the time of the deal.

“This is a home run for HCA,” said Levine, a former HCA executive. “First, it is a high-growth market where they have no competition and their margins are already strong. Then when you are HCA deploying your staffing models and eliminating corporate overhead, that leads to pure synergies. HCA shareholders will benefit tremendously.”

Levine told AVL Watchdog through a spokesperson that his views of the Mission-HCA sale have not changed.

He said Mission never approached Ballad about a potential partnership.

Profits and quality of care

HCA shareholders have benefited since the Mission acquisition. Despite the pandemic, HCA reported record earnings for the second quarter of 2020 and is expected to report its third-quarter earnings next week. In a preview, the company said quarterly revenue would be approximately $13.3 billion, up sharply from a year ago. HCA also reported that it will return, or repay early, approximately $6 billion of government assistance funds received as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

“When Mission Hospital was being proposed for sale to HCA, the community was told that it would be more financially successful due to better economies of scale and a more efficient business structure,” Brownie Newman, chairman of the Buncombe County Board of Commissioners, told AVL Watchdog. “Unfortunately, the community’s experience has been that HCA has increased their profits at the expense of patient care through inadequate staffing of the hospital.”

Invited to respond to Newman’s comment, Nancy Lindell, spokesperson for HCA Healthcare/North Carolina Division, wrote that Mission Health “continues to raise the bar for excellent patient care exemplified by our 5 Star rating from CMS,” the Centers for Medicare & Medicaid Services, “something only achieved by about 10% of hospitals in North Carolina and we have been nationally recognized as a Top 50 hospital for our cardiac care.”

“Year to date,” Lindell continued, “Mission Health has hired almost 400 full-time RNs and nearly 300 CNA and PCT positions,” referring to registered nurses, certified nursing assistants, and patient care technicians. “We continue to actively recruit nurses,” she said. “Additionally, we have hired more than 100 new providers and advanced practitioners.”

“Mission Hospital has almost 80 more RN positions today than in February of 2019,” she wrote. Comparisons for doctors and other positions were not immediately available, she said.

‘Good Common Sense’

The public accessibility to the negotiations for New Hanover Regional system arose partly because the hospital system is owned by New Hanover County, and as a result had more stringent reporting and open meetings requirements.

But the county commissioners and the citizen advisory group the commission established to oversee the process also told AVL Watchdog that, as stewards of a nonprofit community resource established to serve the community, they felt they had an obligation to involve the public in all aspects of the deliberations.

“The more input [from the public] we could get, the better off we’d be,” said Spence Broadhurst, a co-chair of the 21-member Partnership Advisory Group, adding that going “above and beyond” the legal requirements for transparency “just made good common sense.”

Barbara Biehner, also a co-chair of the New Hanover group, said another priority was “trying to communicate with anyone who wanted to listen.” The group held weekly forums with hospital staff to discuss the process, made regular public updates on Facebook and other social media, and established a website where all bids were posted in detail for public scrutiny.

The result, they said, was greater public trust in the process.

Local control, no staff cuts, board seats

Members of the citizen council evaluating the bids for New Hanover Regional wrote on the public website that they were initially opposed to an outright sale. They changed their minds, they said, after learning that a deal would not require giving up significant local control.

If the proposed deal with Novant gets regulatory approval, as seems likely, New Hanover Regional will remain a nonprofit hospital system with local governance and local decision-making; Novant will not be able to change staffing levels without local New Hanover hospital board approval; and Novant will offer no-cost charity care to anyone who earns less than 300 percent of the federal poverty level, up from the current 200 percent. New Hanover Regional also gets up to two seats on the Novant Health parent company board.

In its deal with HCA, the Mission board considered but rejected an offer by HCA for a 50/50 joint venture, AVL Watchdog learned. Instead, the board struck a deal that ceded control to an out-of-state company, surrendered its not-for-profit status, lost control of local staffing levels, and got no HCA board seats.

HCA promised to continue Mission’s existing charity and uninsured care policies, but soon after the sale drew complaints from elected officials and healthcare advocates, along with rebukes from the Attorney General, for its lack of transparency in implementing those promises.

Mission’s board chairman at the time, Dr. John Ball, and Vice Chairman Dr. John Garrett explained their rationale in an opinion piece published in the Asheville Citizen Times: “Ultimately, the Board decided that it could no longer remain both independent and true to its mission: to improve the health of the people of western North Carolina.”

“And,” they wrote, “it is the Board’s ultimate responsibility to decide how best to meet that mission.”

AVL Watchdog reached out to Ball, now a board member at Dogwood Health Trust, and Janice Brumit, chair of Dogwood. Through a Dogwood spokeswoman, both declined to comment.

Mission: ‘No requirement’ to inform public

In a letter to Mission’s employees and volunteers on the day the sale to HCA was announced, Paulus, Mission’s CEO, pledged transparency in the transaction. Shortly thereafter, Rowena Buffett Timms, Mission’s senior vice president, clarified, “We pledge to be as transparent as possible.”

Two months after that, Timms said the public had no right to be involved in the decision process.

“There was no requirement to even announce that a letter of intent had been reached,” Timms told the Citizen Times in June that year.

“While it’s easy to understand why those who don’t appreciate the challenges and complexity of operating a rural hospital in today’s environment may reflexively and emotionally want ‘their’ hospital back, it is unlikely that any knowledgeable observer would believe that is a realistic possibility,” Timms told the Citizen Times the following month.

By November 2018, as public concerns and criticism of the deal continued to increase, Timms said: “No outcome would or could ever fully satisfy everyone, particularly those with only a limited understanding of the transaction.”

In seeking a fuller understanding of the transaction, AVL Watchdog was told that all such information was confidential.

Peter H. Lewis is a former senior writer and editor at The New York Times. Contact us at avlwatchdog@gmail.com.

Correction: This article was updated after publication to remove an inaccurate reference to New Hanover Regional Medical Center’s funding. While the medical center is owned by New Hanover County government, it does not receive government funding.

photo of Mission Hospital taken from the air (or perhaps a hillside) showing the hospital complex in the distance, surrounded by mountains, trees

A done deal: How Mission Health wooed HCA

November 26, 2020 by Asheville Watchdog

A done deal: How Mission Health wooed HCA - North Carolina Health News

More than 2 years later, secrets and silence continue.

By Peter H. Lewis

AVL Watchdog

The news stunned Asheville and Western North Carolina, where Mission Health System Inc. was the area’s largest employer, its main healthcare provider, and a long-time source of civic pride. Seemingly out of the blue, Mission’s directors publicly announced on March 21, 2018, that they had voted to sell the 133-year-old nonprofit to HCA Healthcare, the nation’s largest for-profit hospital chain, for an estimated $1.5 billion.

“To say that [Mission’s] announcement … was a surprise would be an understatement,” the Asheville Citizen Times observed in an editorial. “There has not been the slightest hint anything was afoot until Mission announced that its board had approved the deal unanimously.”

“The first I learned about the Mission sale was when it was publicly announced that it was under contract with HCA,” Esther Manheimer, Asheville’s mayor, told AVL Watchdog. “It was explained to me later that the negotiations were confidential.”

Confidential indeed. Nearly everyone, including doctors, nurses, and local and regional officials, had been shut out of the secret discussions that would lead to one of the biggest business deals in Western North Carolina history, one that Mission’s directors said would transform healthcare in the region for generations to come.

Today, two and a half years later, the story of how and why Mission’s leaders chose HCA remains opaque, cloaked in claims of confidentiality and bound by non-disclosure agreements that, they say, still restrict anyone involved in the sale from publicly discussing or criticizing the deal.

A head start for HCA

But four things are becoming clear, based on documents obtained by AVL Watchdog under public records requests:

One, a core group of Mission directors and executives, including board Chairman John Ball, President and CEO Ronald Paulus, and long-time external strategic advisor Philip D. Green received offers from HCA at least three months before the board formally authorized Paulus to start looking for potential partners. They gave HCA a head start, conferred with HCA executives before setting terms and conditions for other potential bidders, and planned all along to use HCA’s early offers as leverage against other candidates.

Two, although Mission’s board considered other partners — at one point even speculating about alliances with Google or Amazon — it invited only a select few companies to make proposals, quickly dismissed other suitors besides HCA, and invited only one other bidder to make a formal presentation, according to an investment advisor’s report to the Attorney General. The other bid was rejected quickly.

Three, based on “issues and concerns” that surfaced during pre-approval investigations by Attorney General Josh Stein, the Mission board held a special meeting Jan. 8, 2019, to discuss issues involving Green, Mission’s chief negotiator and a long-time friend and advisor to Paulus. Stein approved the sale just days after receiving legally binding assurances from Mission’s general counsel, the board, and Ball that they found no evidence Green “profited or benefitted directly or indirectly” in the negotiations or sale.

shows an older man in a collared shirt looking at the camera — Philip D. Green, Mission’s strategic advisor

And four: Even today, former Mission directors and executives, HCA officials, and board members of the Dogwood Health Trust that was created with proceeds from the deal cite confidentiality and non-disclosure restrictions in refusing to discuss the negotiations except in broadly general terms. AVL Watchdog reached out to Paulus, Green, Ball, and others involved in the negotiations, all of whom either declined to answer questions or did not respond.

By continuing to prevent even superficial scrutiny of the documents and reports related to the agreement, or even answer basic questions, they make it hard for the public to trust that Mission, and the community it was created to serve, got the best possible deal.

Board explores partnering options

Leading up to the sale, board members later acknowledged, the Mission system was as strong financially as it had ever been, consistently profitable, dominant in the region, deeply respected, and recognized as one of the highest-quality healthcare systems in America.

Even so, the national trend to hospital consolidations was accelerating. Competition was growing. Reimbursements from Medicare and Medicaid were falling, and the North Carolina legislature was steadfast in refusing to expand Medicaid, leading to a rising number of uninsured patients.

Without a financially and operationally strong partner or buyer, board members and consultants said, Mission was doomed to a future of relentless cost-cutting that ultimately would degrade the quality, access, and affordability of care, and possibly even lead to the closure of hospitals.

According to a confidential analysis provided to the Attorney General’s office by Stout Risius Ross, an investment bank hired by the state — a redacted copy was provided to AVL Watchdog under a public records request — Mission’s active search for a partner or buyer intensified in July 2017. Ball created a seven-person working group to consider Mission’s partnering options that included himself, Paulus, Green, Mission’s General Counsel Ann Yaeger Young, and three board members: Dr. John Garrett, attorney Wyatt Stevens, and banker Robert Roberts.

shows a confident looking man with his arms crossed across his chest looking at the camera — Ronald A. Paulus, Mission’s President and CEO

HCA, the biggest for-profit hospital operator in America, with annual revenues of $50 billion, was at the top of their list. HCA had unmatched scale and a reputation for cost-cutting and back-office efficiency, strengths that Mission needed. HCA also had no existing presence in North Carolina, and thus could acquire Mission, effectively a regional monopoly, without being subject to antitrust concerns, an attractive option for the company.

Three months before the full board authorized Paulus to contact potential partners, “The working group directed Mr. Green to negotiate proposed term sheets with HCA for both a 50/50 joint venture model and a full asset acquisition model,” the Stout report said.

Visit to HCA headquarters

On Aug. 12, 2017, Green delivered HCA’s offers to buy or partner with Mission to Paulus, who passed them to Ball. Members of the working group later confirmed to Stout’s interviewers that their strategy all along was to use HCA’s offers as negotiating leverage against other possible bidders, the report said.

The following month, Sept. 17 and 18, “most of” the working group traveled to HCA’s headquarters in Nashville for meetings, the report said.

HCA Healthcare, formerly known as Hospital Corporation of America, had a history that included settling lawsuits ranging from Medicare and Medicaid fraud to breaking contractual promises. But Mission directors said after their Nashville visit that they were convinced HCA’s new management was scrupulously ethical.

Just six months earlier, in 2017, HCA paid more than $200 million to settle lawsuits related to its purchase of a nonprofit hospital system in Kansas City, a deal very similar to the one HCA was proposing with Mission.

And in 2003, in what was the largest health care fraud investigation in history, HCA paid the government more than $1.7 billion in restitution, fines and penalties to settle cases. In all cases, HCA denied wrongdoing.

There is no indication that HCA did anything wrong in pursuing or negotiating the deal with Mission.

Nancy Lindell, a spokesperson for Mission Health/North Carolina Division of HCA, did not respond to AVL Watchdog’s questions about HCA providing term sheets to Green in August 2017 or the meetings at HCA headquarters the next month.

Ball, Mission’s chairman, did not include the early offers from HCA or the meetings in Nashville in a timeline of the deal he provided to the Attorney General, according to records obtained by AVL Watchdog.

No RFPs: Board restricts bidders

Not until a board meeting on Oct. 26, 2017, more than five weeks after the meetings at HCA, did the full 20-member Mission board create a Strategic Planning Committee to officially begin exploring potential partnerships and authorize Paulus to begin sending formal letters of inquiry to potential bidders, records show. Green, a lawyer, was also tasked with being Mission’s lead negotiator.

Paulus told NC Health News after the deal with HCA was announced that he focused the bidding invitations on potential buyers who would have “enough value to bring that they should be considered.” Paulus said he identified “a good handful” of potential bidders and wrote formal letters to them to solicit their interest. Based on those responses, he said, the field was narrowed to two candidates besides HCA, then one.

The board’s decision to limit competitive bids also makes it difficult to determine if Mission got the best possible deal.

Other potential partners dismissed quickly

In the end, only one potential suitor besides HCA was invited to make a formal presentation to the board. Even today, neither HCA nor Mission will say who the other bidder was, except that it was a nonprofit, or how that company’s offer compared to the one from HCA that Mission already had.

Both HCA and the other company made their presentations on Feb. 12, 2018, and the Mission board — in the same meeting — voted unanimously to pursue a deal with HCA. The only question was whether to partner with HCA, thereby retaining some local control, or sell to HCA completely.

HCA has entered into joint partnerships with other not-for-profit hospital systems, including Austin and San Antonio.

At the next board meeting, March 8, 2018 — 19 weeks after the board formally authorized Paulus to initiate a search for potential partners — the board voted unanimously to sell Western North Carolina’s legacy healthcare system to HCA.

On March 21, 2018, Mission publicly announced that it had signed a letter of intent to be acquired by HCA. The letter allowed formal negotiations and due diligence to begin.

‘Issues and concerns’

By state law, the sale of a nonprofit company to a for-profit company must be reviewed by the Attorney General. The investigation led to a number of stipulations added to the proposed Asset Purchase Agreement, but also raised questions about how Mission’s leadership and outside advisors conducted the negotiations.

Green and Paulus were long-time friends from Pennsylvania. After Paulus joined Mission as CEO in 2010, Green and his consulting company, PDG Consulting of Arlington, Va., became a long-standing strategic advisor to Mission.

According to his biography on the business database Crunchbase, “Since 1976, Mr. Green has represented clients in a variety of fields, including health industry mergers and acquisitions, corporate planning and transactions, and litigation.”

Green did not respond to questions about whether he had other business dealings with HCA either before or during the Mission negotiations.

Records obtained by AVL Watchdog from the Attorney General indicate that the Mission board held a special meeting on Jan. 8, 2019 for “extensive deliberations regarding specific factual circumstances of interest to both the Board and the OAG (Office of the Attorney General).” Both Paulus and Green were excluded for at least a portion of the meeting.

The board heard a report from “outside legal counsel” about “various issues involving or related to officers of and/or advisors to Mission and the negotiation of the transaction.”

After the Jan. 8 meeting, Donald Esposito Jr., then Mission’s General Counsel, wrote to the Attorney General’s office to confirm that “neither Mission’s strategic advisor (PDG Consulting), its principals, nor any company with which they are affiliated will benefit directly or indirectly as a result of the transaction between HCA and Mission.”

The letter was requested by the Attorney General’s office, and Mission’s assurances were considered “legally binding,” Laura Brewer, communications director for Stein, told AVL Watchdog.

Ball also wrote to Stein, saying that the board had discussed “historical communications between Mission representatives and HCA,” communications with other potential partners, and “various issues involving or related to officers of and/or advisors to Mission and the negotiation of the transaction.”

“The Board has concluded,” Ball wrote to the Attorney General, “… that no member of Mission’s management or its outside advisors took any action, or failed to take any action, that was detrimental to Mission’s interest.”

John R. Ball, Chairman of the Mission Board of Trustees

shows a man in a suit and tie looking at the camera and smiling — John R. Ball, Chairman of the Mission Board of Trustees

“The Mission Health Board of Directors held the legal authority to govern that nonprofit corporation,” Brewer said. It had heard and discussed the Attorney General’s “issues and concerns” and decided, unanimously, to go ahead with the sale to HCA.

“The Attorney General’s Office determined that the Mission Board of Directors was fully informed as required by North Carolina law,” Brewer said. Stein traveled to Asheville January 16 to announce that he would not oppose the sale.

‘A fair deal’

Multiple experts in healthcare finance and mergers, including Mission’s investment banker, Cain Brothers, agreed that from a strictly financial perspective, HCA’s $1.468 billion offer to buy Mission was a fair deal.

They also noted that a fair deal is not necessarily the same as the best deal.

Today, after 20 months of HCA’s contentious management of the Mission system, and after a recent, eye-popping deal for a smaller, less profitable nonprofit hospital system on the other side of the state, it’s unclear if Mission even got the best possible deal.

Paulus joins HCA

The sale of Mission Health Care to HCA became official on Feb. 1, 2019. Just two weeks later, Paulus, who along with Green had championed the sale of Mission to HCA from the start, announced that he was resigning to take a new job, as strategic advisor to HCA.

Paulus is still on HCA’s payroll, the company confirmed.

Green declined to answer specific questions from AVL Watchdog, but wrote: “I hope you will take the opportunity in your article to give Mission’s Board of Trustees, as well as the Mission executive team, credit for the unbelievably successful transaction consummated with HCA; a transaction which was of enormous benefit to Mission and its employees, its patients and to the larger Western North Carolina community. While Mission’s outside advisors provided guidance, the Mission Board of Trustees made a fully informed and independent decision.”

Today, Green and Paulus remain close. PDG Consulting LLC and RAPMD Strategic Advisors LLC, their respective consulting firms, share the same executive assistant.

Peter H. Lewis is a former senior writer and editor at The New York Times. Contact us at avlwatchdog@gmail.com.

A large brick hospital building that belongs to Mission Health

Independent monitor for hospital merger going public in big way

January 28, 2020 by Carolina Public Press

Independent monitor for hospital merger going public in big way - North Carolina Health News

Gibbins Advisors will hold a series of public meetings starting this week to provide information on its role in monitoring HCA Healthcare's compliance with promises it made when it bought Mission Health.

Neil Cotiaux

Carolina Public Press

Gibbins Advisors, the independent monitor charged with validating HCA Healthcare’s compliance with the promises it made when it acquired Asheville-based Mission Health nearly a year ago, is taking its efforts public in a big way.

From Jan. 28 to Feb. 13, the Nashville, Tenn.-based firm has scheduled seven 90-minute meetings open to the public at locations across Western North Carolina to provide information on its “role and scope” as independent monitor and to get feedback on HCA’s performance.

Gibbins is also launching a website that will provide information on the firm’s activities and enable the public to submit feedback through an online portal at IndependentMonitorMHS.com.

“We hope during or after the sessions, community members will highlight concerns they have for us to review further,” said Ron Winters, principal and co-founder of Gibbins, in a statement to Carolina Public Press.

“Even if the concerns are outside the scope of our role or HCA’s undertakings, we will channel the information back to the appropriate parties at HCA, ANC Healthcare Inc. (the entity winding down the former Mission system), Dogwood Health Trust and the (hospital) advisory boards,” Winters’ statement added.

Winters and Thomas Urban, the firm’s managing director, are the only scheduled speakers at the seven events.

Gibbins was named independent monitor Oct. 31, when Josh Stein, North Carolina’s attorney general, announced that he had consented to the choice after a monthslong search. The firm had earlier received signoff from ANC and Dogwood.

Stein played a leading role in negotiating numerous service requirements that HCA ultimately agreed to in its $1.5 billion deal with Mission.

In announcing his signoff on Gibbins, Stein attached great importance to the firm’s willingness to interact with the public.

“To be successful, the monitor must take the time to engage with communities in Western North Carolina,” Stein said. “Specifically, I am looking forward to hearing about town hall meetings and other opportunities for the monitor to hear directly from the people who are impacted by HCA’s health care decisions.

“That commitment to engaging with local communities, along with the monitor’s qualifications, led me to direct my office to consent to the selection of this monitor.”

“The N.C. Attorney General’s Office encouraged these meetings, and we agreed with their thinking,” Winters told Carolina Public Press. “We had planned to hold them anyway.”

Gibbins’ higher-profile approach contrasts with the more traditional approach taken by many independent monitors, which focus almost exclusively on inspecting organizations, reviewing their reports, gauging compliance with obligations, conferring with attorneys general and other agencies, and offering suggestions for organizational improvement.

“Traditionally, monitors are low profile because the task is not about the monitor but is about objectives of the parties who established the monitorship,” said Jacob Frenkel, a founding director of the International Association of Independent Corporate Monitors and a member of the Washington, D.C., law firm of Dickinson Wright.

But the state-mandated oversight situation with HCA in North Carolina is leading to the novel approach. “Here, ‘public’ input and ‘public’ responsibility is central to the state’s expectations,” Frenkel said.

North Carolina’s attorney general is not the only prominent figure who supports interaction between Gibbins and the public.

Would Dogwood watchdog?

Gibbins, which now reports to ANC, will soon report to Dogwood Health Trust, a nonprofit foundation created in the merger of for-profit HCA and nonprofit Mission Health. Gibbins will be compensated by ANC and Dogwood, and is not being paid by HCA.

Dogwood’s CEO, Antony Chiang, was president of Empire Health Foundation in Spokane, Wash., before moving to Asheville. While in Spokane, he had extensive experience dealing with a large health care system.

In 2017, Chiang’s foundation filed a federal lawsuit against Community Health Systems Inc., a for-profit company that owned CHS Deaconess Medical Center and CHS Valley Hospital and Medical Center.

Last Oct. 8, Empire announced a settlement of that suit, which alleged that CHS had “failed to comply with state law and its own purchase agreement in its provision of charity care to patients of Deaconess and Valley,” according to an Empire press release.

Empire had the right to enforce CHS’ contract to purchase the two hospitals and alleged that CHS had “breached its contractual obligation to make ‘reasonable efforts’ to provide charity care to the community at levels that met or exceeded the eastern Washington regional average,” the release states.

The settlement is expected to extinguish as much as $50 million in hospital debt for thousands of former patients.

Whether Dogwood under Chiang could potentially play a similar role remains unclear.

Maintaining a charity care policy that assists patients at up to 400 percent of the federal poverty line is one of numerous promises that HCA made as it acquired Mission.

“I have had some conversations with people at Dogwood, and they had indicated that they want the monitor to have contact with the public and to solicit input from the public as far as what level of quality of service is being provided by HCA,” said Victoria Hicks, a community activist involved in tracking HCA’s performance.

“It is absolutely consistent with everything we have read and heard about him and have heard from him,” Hicks said of Chiang.

HCA’s obligations

HCA’s agreement to maintain a charity care policy is one of many promises it has made.

Other obligations include a 10-year commitment to provide specified services at local hospitals, an agreement not to close facilities or cease providing services unless the independent monitor and a local advisory board agree, opening a new inpatient behavioral health hospital in Asheville and building a replacement facility for Angel Medical Center in Franklin.

As for HCA’s closure of two rehabilitation clinics in Buncombe County last year, “This is an ongoing topic of discussion that both the AG’s office and the independent monitor will be handling in concert moving forward,” said N.C. Department of Justice spokesperson Laura Brewer in response to a question from CPP.

“The monitor’s plan for public hearings is a clear proactive measure to create the broadest opportunity for community input,” said Frenkel of Dickinson Wright.

“This is a thoughtful method for conveying to the state that communication and transparency, particularly to address and alleviate community concerns, is a central component at the onset of the monitorship.”

Winters, Gibbins’ principal, expects the use of independent monitors to become even more commonplace as the health care industry consolidates.

“We expect to see growth in the use of independent monitors, and evolution of the role, supporting health care transactions in coming years.”

Time and place of independent monitor public meetings:

Doors open 30 minutes before each event.

Cashiers meeting (Highlands-Cashiers Hospital)
Tuesday, Jan. 28, 2020 / 5:30 to 7 p.m.
Cashiers/Glenville Recreation Center
355 Frank Allen Road, Cashiers, NC 28717
Highlands meeting (Highlands-Cashiers Hospital)
Wednesday, Jan. 29, 2020 / 5:30 to 7 p.m.
Highlands Civic Center Meeting Room
600 N. Fourth St., Highlands, NC 28741
Macon County meeting (Angel Medical Center)
Thursday, Jan. 30, 2020 / 11:30 a.m. to 1 p.m.
Robert C. Carpenter Room, Macon County Community Facilities Building
1288 Georgia Road, Franklin, NC 28734
Buncombe County meeting (Mission Hospital)
Monday, Feb. 10, 2020 / 5:30 to 7 p.m.
Blue Ridge Room, Mountain Area Health Education Center
121 Hendersonville Road, Asheville, NC 28803
Transylvania County meeting (Transylvania Regional Hospital)
Tuesday, Feb. 11, 2020 / 5:30 to 7 p.m.
Unitarian Universalists of Transylvania County
24 Varsity St., Brevard, NC 28712
McDowell County meeting (Mission Hospital McDowell)
Wednesday, Feb. 12, 2020 / 11:30 a.m. to 1 p.m.
Marion Community Building
191 N. Main St., Marion, NC 28752
Mitchell County meeting (Blue Ridge Regional Hospital)
Thursday, Feb. 13, 2020 / 5:30 to 7 p.m.
Auditorium, Burnsville Town Center
6 S. Main St., Burnsville, NC 28714

shows hospital building that's under construction

Where is Mission Health’s independent monitor?

October 29, 2019 by Carolina Public Press

Where is Mission Health’s independent monitor? - North Carolina Health News

A state-mandated independent monitor to ensure that any changes implemented by Mission purchaser HCA comply with terms of sale the state stipulated has not yet been announced.

By Neil Cotiaux

Carolina Public Press

The mandate for an independent monitor was the kind of announcement that many residents of Western North Carolina wanted to hear.

On Jan. 16, N.C. Attorney General Josh Stein announced that Tennessee-based HCA Healthcare had agreed to a checklist of legal requirements to protect the public as part of its plans to acquire Asheville-based Mission Health, the largest hospital operator in the area.

One of Stein’s requirements was to have an independent monitor look over the shoulder of Mission Health’s new for-profit owner to ensure that promises made were promises kept.

Across the region’s 18 counties, a skeptical public, fearful of any closing of facilities or service curtailments that might result from the $1.5 billion merger, breathed more easily.

Nine months after the merger took effect, the public still has no idea whether a monitor has been chosen, what the firm’s name is, when it will start work and – importantly – who’s been minding the store to keep HCA and Mission Health accountable in the interim.

In a June 11 email, Laura Brewer, communications director of the N.C. Department of Justice, said Dogwood Health Trust, the philanthropy created by the HCA-Mission merger to improve the health and well-being of the region’s people, and ANC, the health care entity winding down Mission Health’s financials, had agreed to hire a specific monitoring firm and had sent their recommendation to the DOJ.

“We are in the process of evaluating whether to consent, a process that we expect will take a few weeks,” Brewer said in her statement to Carolina Public Press.

Victoria Hicks, a spokesperson for the Health Equity Coalition, a citizens group that fought to have HCA commit publicly to certain service levels, told Carolina Public Press the group wants answers.

“We would want to know who the independent monitor will be and we are eager to begin to try to engage that person or that firm … about how the work will proceed.

“The things that the monitor is charged with monitoring are some of the very things that HEC was at great pains to advocate for in the sales agreement,” Hicks said.

“And so we have a keen interest in knowing that there is follow-through on those items and that the interests of the public are being protected.

“With every passing day, we probably grow a little bit more eager to have that name out on the table.”

Hicks and her colleagues at HEC aren’t the only ones in the dark about the independent monitor.

One applicant hoping to be chosen for the role told Carolina Public Press that the firm has heard nothing either way. Periodic check-ins with the DOJ by Carolina Public Press have yielded no substantive comment.

A moving target

Under for-profit HCA’s amended agreement to purchase nonprofit Mission Health, the Tennessee-based health care conglomerate made numerous “forward-looking promises” that are supposed to be overseen by an independent monitor.

Those promises include a 10-year commitment to provide specified services at local hospitals, an agreement not to close facilities or cease providing services unless the new monitor and a local advisory board agree, construction of a new inpatient behavioral health hospital in Asheville and a replacement facility for Angel Medical Center in Franklin, and a year of support for emergency medical services in Madison, Mitchell and Yancey counties.

The announced plan is for the monitoring firm, whose leader must have at least 12 years of experience in a senior management position in health care, to work with the advisory boards of each hospital, the management of HCA’s North Carolina division and Dogwood Health Trust. The monitor would initially report to ANC, then to Dogwood, the philanthropic foundation has said.

Mission Health recently announced the closure of two rehabilitation clinics in Buncombe County, including this one in Candler. A state-mandated independent monitor to ensure that moves like this don’t violate the terms of Mission’s acquisition by HCA has not yet been named. Photo credit: Colby Rabon, Carolina Public Press

Hicks said charity care is very much on the minds of the health coalition’s members.

In an addendum to the sales agreement, she said, HCA spelled out terms under which it will extend medical care to those who can’t pay for it “and it was represented to be more generous than the policy that Mission had before the sale.”

“We hear on many fronts that there have been significant changes to the way in which people have to proceed if they want to access that charity care and the way that it is being administered,” Hicks said.

“We don’t know that HCA is out of compliance, but it seems that there is a huge amount of confusion about how individuals who need that help have to operate in order to get it.”

Separately, Mission Health has confirmed that it has been consolidating its outpatient rehabilitation clinics in Candler and on Biltmore Avenue in Asheville. Patients using those locations are being directed to one of six other outpatient rehab facilities.

So, who’s been minding Mission Health during these changes in services if an independent monitor has not?

“I don’t think I have any basis for speculation about that, but I have no doubt that it’s very much on the minds of both the AG’s office and certain people within Dogwood,” Hicks said, noting that she communicates with both offices periodically. “I have no cause for alarm at this point.”

HEC is hoping to see “a lot of transparency” when the independent monitor makes its first formal report to the Attorney General’s Office in 2020, she added.

Once in place, the monitor is expected to remain active for a decade.

Rules of engagement

Across the country in a variety of industries, independent monitors are paid by the company they oversee.

In a paper on the role of independent monitors for the National Association of Attorneys General, former Tennessee Attorney General Robert Cooper says the common practice of having companies pay the salary of the firm examining them does not compromise the firm’s independence.

The monitor is independent of both the company and the government, he writes, citing federal Department of Justice memos and American Bar Association standards.

“Even though the monitor is engaged and compensated by the company, the monitor owes the company no obligations or duties,” Cooper says.

But while a monitor has access to company information and employees “as reasonably necessary to fulfill the monitor’s obligations,” those access rights are usually specified in a legal filing, he adds.

Jesse Caplan, managing director at Boston-based Affiliated Monitors Inc., says one of the benefits of using an independent monitor is that it frees up limited public resources for other purposes.

“If a health care company or practitioner can operate in the future in a manner that meets the government’s objectives – compliance, transparency and high-quality care – that is good for the industry and the patients and clients they serve,” Caplan said on a podcast.

“We actually don’t have a great mechanism in North Carolina for reviewing these mergers,” Dr. Kevin Schulman, a professor of medicine at Stanford University, told North Carolina Health News in April.

“(The Attorney General’s office) is really the only agency at the state level that can examine these kinds of combinations, and they’re tremendously underresourced,” Schulman said, referring to a proposed merger of Atrium Health and Wake Forest Baptist Health announced after Mission’s merger.

As for HCA and Mission, Hicks has her fingers crossed.

“We are willing to just see how things go,” she said. “It’s a little frustrating to be in this sort of waiting game.”

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