N.C. state treasurer watching potential sale of NHRMC

N.C. state treasurer watching potential sale of NHRMC

NORTH CAROLINA (WECT) - State officials are paying attention to the county’s exploration of the possible sale of New Hanover Regional Medical Center, including what it could mean for the state’s bottom line.

On Monday, state treasurer Dale Folwell said he is watching the actions of the New Hanover County Commissioners, and he’s not just as a curious bystander. Folwell has concerns about what a potential sale would mean for healthcare affordability, access to care and the system’s outstanding debt.

Folwell, a republican who served four terms in the North Carolina House of Representatives as Speaker Pro-Tem, said his interest in the possible sale of NHRMC stems from his role as the “keeper of the state purse."

Bonds

First, Folwell said he will be watching the Request for Proposal process because of what it could mean for NHRMC’s outstanding bond issues — which he said total $360 million.

NHRMC has taken out a variety of bonds in recent decades for capital expansion projects and other needs, with existing bonds maturing as far off as 2047, according to Folwell.

Because of the state statute covering bond issuance to non-profit organizations such as NHRMC, Folwell said the future of those debts will depend on the type of buyer — if any — is interested in the hospital.

For example, Folwell said, if a for-profit organization were to purchase NHRMC, the bonds would likely become due immediately, because a for-profit company cannot absorb the debt of a non-profit company.

Even if a non-profit organization bought the hospital, the details of transferring a debt from one organization to another can be complicated, he said.

Beyond that, he said he has concerns about the greater effect a sale would have on the region.

“The bonds, really, are — as much as $360 million means to all of us — is really a small part of this transaction,” he said. “Our largest concern at the treasurer’s office, in addition to the debt, is the long-term impact on the accessibility and affordability of healthcare in that area.”

Folwell said based on his experience, he has serious doubts that accessibility and affordability would improve if the hospital is sold.

“My experience of looking at two or three of those, or two or three of these, across North Carolina during my last two and half years as treasurer is that there is no evidence on the face of the Earth, whether it’s a North Carolina merger or a merger anywhere else in the United States, when you have a concentration or consolidation of power in the hands of fewer healthcare providers, there is no evidence that quality is going to increase, or costs are going to decrease,” he said.

He said he has these concerns not only because of that experience, but because of the responsibility imbued on his title to manage the healthcare of state employees.

“I say this, not because of my curiosity, but because as the keeper of the public purse we have responsibilities to run the state health plan," he said. "We are talking about millions of claims, tens of thousands of individuals, and tens of millions of dollars worth of spend.”

Folwell estimates around 40,000 people in the seven-county area served by NHRMC are on the state health plan as employees or retirees.

He said he considers NHRMC to be a “model” of what a community hospital system should be, so he is somewhat puzzled by the county and hospital authority considering a sale.

“From my perspective it is a high quality, low cost, high accessibility, profitable community hospital,” he said. “So I’m not sure what problem they are trying to solve. Because as I said earlier, most of the hospitals across the United States, you can’t say all those things about them in one sentence.”

WECT’s Jon Evans contributed to this report.

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