CoastLine: Exploring The Case For And Against A County Hospital Sale

Feb 27, 2020

New Hanover Regional Medical Center is exploring whether to sell, create a partnership, reorganize, or remain independent.  

Local officials, which include NHRMC Board members and administrators, New Hanover County Commissioners, and members of a Partnership Advisory Group chartered by the county, say the need for a sound financial plan for a hospital that serves seven counties is critical. 

The explosive growth in the Cape Fear region, the increase in operating expenses, and political uncertainties might make the case for a sale or partnership.  While New Hanover County is healthier than neighboring counties, according to recent state health rankings, more than 50 percent of NHRMC patients come from outside New Hanover County.  That leaves NHRMC with the burden, according to the Partnership Advisory Group, for improving care and wellness in areas that have some of the worst health outcomes in the state. 

A hospital sale, however, would face strong public opposition.  Not least because of the case studies that show hospital consolidations lead to higher health care costs.  Whether those deals also tend to lower the quality of health care is still in question.  But on January 2, 2020, the New England Journal of Medicine published a study examining Changes in Quality of Care after Hospital Mergers and Acquisitions.  It concludes, “Multiple studies have shown that hospital mergers have led to higher prices for commercially insured patients…  Hospital acquisition by another hospital or hospital system was associated with modestly worse patient experiences and no significant changes in readmission or mortality rates.”

Opponents of selling the hospital also argue that once the deal is done, a major local government asset is not only gone; it’s unrecoverable. 

There’s a compelling test case going on in the western part of the state.  In 2019, Mission Health in Asheville, North Carolina sold to HCA Healthcare.  Community meetings have drawn around 600 stakeholders.  The feedback coming from these meetings is not good.   Complaints center on aggressive cuts to services in the community, personnel within the hospital, and the closing of facilities.  Critics say HCA is not keeping its promises. 

New Hanover Regional Medical Center opened in 1967.  Over the last several years, NHRMC has posted consistent increases in its net position.  At the end of the last fiscal year, NHRMC posted $107 million -- that's revenues over expenses.  The year before that, it saw a nearly-$80-million surplus. 

Despite that robust financial health, Ponder Financial, the firm hired by county officials to help determine a strategic path for NHRMC, made this case:  the hospital has had stronger than average operating margins since 2013 but much of that margin depends on funding sources that could be lost with policy changes on the table at the state and national levels.  

Proposals for partnership or purchase of NHRMC are due by March 16th.    

On this edition, we’re going to explore what we’ve learned so far with the two co-chairs of the Partnership Advisory Group in the second half of the program.  Joining me now are two members of Save Our Hospital, a nonprofit launched in 2019 as a response to the county’s Resolution of Intent To Sell.

Guests - Segment 1:

Gene Merritt, Founder and President, Save Our Hospital

Alex Hall, Spokesperson, Save Our Hospital

Guests - Segment 2: 

Barb Biehner, C0-chair, NHRMC Parternship Advisory Group

Spence Broadhurst, Co-chair, NHRMC Partnership Advisory Group