As county considers selling NHRMC, a closer look at some of the frequently asked questions

As county considers selling NHRMC, a closer look at some of the frequently asked questions

SOUTHEASTERN NORTH CAROLINA (WECT) - The potential sale of New Hanover Regional Medical Center affects far more than a few blocks along South 17th Street in Wilmington.

After announcing to staff and then the public that the New Hanover County Commission will take up the question of the hospital’s future, officials took questions from reporters on the details of what a potential sale would entail.

As county considers selling NHRMC, a closer look at some of the frequently asked questions

What will happen to my pension?

What will happen to employee benefits is the most common question received by NHRMC as well as the WECT newsroom.

President and CEO John Gizdic said protecting employees’ interest is high on the priority list.

For employees already vested in the pension system — typically those with at least five years’ service — their benefits are secure.

Gizdic said the pension funds have already been set aside, and the status of those employee benefits will not change, even if ownership of the hospital does.

However, for those still working toward vested status, the future of those benefits would have to be part of a potential sale agreement.

“If you were still in the vesting process, then that is something we would definitely take into consideration and make sure that no employees were penalized as part of any situation moving forward,” he said.

What happens to Pender Memorial Hospital?

In addition to its main campus in Wilmington, NHRMC operates dozens of facilities throughout southeastern North Carolina, from Whiteville to Wallace, and from Southport to Onslow County.

Some of those the hospital group owns outright, and would be included in the assets early valuations estimate to total more than $1 billion.

Others, such as Pender Memorial Hospital in Burgaw — which is owned by Pender County but managed by NHRMC — operate under different agreements, but would still be affected by the potential sale.

Pender County commissioner and NHRMC trustee David Williams said NHRMC has invested significant capital in Pender Memorial over the last 20 years, and that the relationship remains an important one.

“I can honestly say it’s been a mutually beneficial arrangement for both sides,” he said by phone Wednesday afternoon.

Pender County recently signed a two-year extension with NHRMC for management of the hospital — a contract that would have to be honored by a new owner if a sale were to go through prior to its expiration.

While he said it’s too soon to say what the future holds, in his personal opinion Williams hopes Pender will remain with NHRMC in whatever form it takes.

“I, for one, like being part of this regional system,” he said. “And I hope that we can continue to be part of a regional system.”

Who will enforce the terms of an agreement?

A relationship with Pender Memorial could be something New Hanover County includes in a Request for Proposal — the document potential buyers would respond to in order to be considered as a partner candidate.

Stipulations such as maintaining certain facilities, retaining employees and committing to community initiatives were all things Gizdic said could be part of an RFP to ensure the culture and goals of NHRMC remain if ownership is transferred away from the county.

The details, Gizdic explained, would be outlined in a contract negotiated between the county and a potential buyer. He said by approaching the question of selling now, with NHRMC’s current financial position and market penetration, the county would have more leverage to see their goals included in that contract.

“We are in that position of strength, and that really gives us the ability to do it on our terms," he said.

Enforcing that contract, however, would be the job of the North Carolina Attorney General.

A spokesperson for Attorney General Josh Stein explained the office has a statutory right to review any transaction where a nonprofit such as NHRMC transfers all or nearly all of its assets.

An example of this can be seen with Mission Health in Asheville, which was purchased by HCA Healthcare, a for-profit group, earlier this year.

“As a result of that review and negotiation, HCA strengthened its commitments to provide healthcare services, the health system’s foundation has agreed to make its board more representative of the communities it will serve, and the parties have agreed to enforcement measures that will ensure compliance with this agreement,” explained N.C. Department of Justice spokesperson Laura Brewer.

In that case, the Attorney General’s office would be able to take legal action against HCA if it breached the terms of the agreement it made with Mission Health.

The Attorney General’s office could not comment on the NHRMC case specifically, but said they remain committed to protecting the integrity of healthcare across the state.

What will New Hanover County do with all the money?

With more than $1 billion estimated to be on the line, some New Hanover County Commission members are already discussing what those funds could be directed toward if the sale materializes.

Commission Vice-Chair Julia Olsen-Boseman and Commissioner Woody White outlined early ideas for the proceeds shortly after the announcement Tuesday.

“The options and opportunities are limitless with this,” Boseman said. “Not only are we going to invest in healthcare, but we are going to invest in the rest of the community that we so need."

Public Safety and Opioids

Both Boseman and White said they’d like to see some of the proceeds go toward combating the opioid crisis, both through additional treatment and recovery resources, as well as through increased enforcement activities.

“Let’s try to stop the drugs at our county line,” Boseman said.

Education

The proceeds could also be directed to New Hanover County Schools, either through capital investments or through other means.

As for his goals, White posed the question: “What can we do transformationally [sic] to bridge the achievement gap to help those kids who are underperforming, and do more in our public schools?”

County Manager Chris Coudriet mentioned funding could not only be directed toward K-12 schools, but to early childhood education as well as continuing education for adults.

Debt

In addition to the social benefits, White and Boseman said the funds could be used to improve the county’s overall financial position.

White noted the ability to use the funds to reduce the county’s debt position, while also opening the door to lowering taxes.

In 2018, debt service made up 16 percent of the county’s budget, or $54.6 million for the 2017-2018 fiscal year.

The influx of cash would also help the county’s bond rating, Boseman noted, meaning future debt could be acquired at a lower interest rate.

Reservations

While White and Boseman noted the possibilities of how the funds could be utilized, Commissioner Rob Zapple said he has concerns about focusing on those possibilities.

"There may be some short-term gain that we can get out of it, but that pales when you compare that to what having a strong healthcare system in our community means to us now and in the future,” he said.

Do you have questions about what the sale of NHRMC could mean? If you do, send them to investigates@wect.com.

Copyright 2019 WECT. All rights reserved.