NHRMC Partnership Advisory Group gets primer on healthcare industry, hospital strategic plan as RFP process really begins

NHRMC Partnership Advisory Group gets primer on healthcare industry, hospital strategic plan as RFP process really begins
The Partnership Advisory Group in charge of exploring the future of NHRMC gets a primer on the healthcare industry at its Nov. 13 meeting. (Source: WECT)

NEW HANOVER COUNTY, N.C. (WECT) - If there is one certainty when it comes to the future of healthcare in southeastern North Carolina, it’s that the future itself is most uncertain.

“We can figure out how to respond to that future, or we can create the future,” said New Hanover Regional Medical Center CEO John Gizdic.

At its second meeting Wednesday night, the Partnership Advisory Group (PAG) in charge of exploring the future of NHRMC learned about the changing landscape of the healthcare industry and the growing needs of the hospital that employees more than 7,000 people.

Those items have been held up as the primary motivations behind exploring the future of the hospital, but now the details are finally on the table.

Industry Trends

In general, the healthcare sector is transitioning from one based on transactions — where hospitals and doctors are paid based on the number of patients they see or procedures they do — to one based on health outcomes, also known as a “value-based” system.

Value-based healthcare essentially establishes a set reimbursement rate for each patient, and the hospital or doctor’s goal is to keep that person as healthy as possible.

If they succeed, the hospital saves money, and if they don’t, they lose it — meaning hospitals will be taking on some of the financial risk that has traditionally been held by insurance companies.

David Burik, a consultant from Navigant, which NHRMC uses in several ways, explained this concept along with Gizdic.

The transition isn’t merely conceptual: Blue Cross Blue Shield has settled details with several large healthcare providers in North Carolina to move toward a value-based system, and Gizdic says he assumes NHRMC will be next when the hospital’s contract with BCBS is up for renewal in nine months.

Gizdic and Burik said that is the same scenario Mission Health in Asheville faced before eventually being purchased by a for-profit entity.

There are other dynamics at play as well, Burik explained.

Patients are increasingly utilizing outpatient services rather than being admitted for inpatient care.

As the “Baby Boomer” generation continues to age into Medicare eligibility, he said, that will also shift the spread of payments, usually to the detriment of a hospital system’s bottom line.

Hospital Needs

NHRMC has its own issues on the horizon as well.

Gizdic localized several of the trends Burik introduced, explaining how they would affect the hospital’s ability to provide quality care while maintaining financial stability.

He also showed financial projections for the next 15 years and the rough seas that appear to be ahead.

While NHRMC is in a strong financial position today, Gizdic explained, several metrics used by credit agencies to determine the institution’s financial health look to be on a steady decline.

NHRMC’s operating margin looks to shrink to just 3 percent by 2023, and its cash on hand to maintain operations will dwindle well below where the agencies deem is appropriate.

Some of those issues could be addressed by restructuring internally if the hospital remains county-owned, Gizdic said, but not all of them — particularly the need to have leverage when buying supplies and equipment, and the ability to innovate as the industry changes.

PAG Co-Chair Barb Biehner said the goal of Wednesday’s meeting was to make sure all of the PAG members are on the same page.

She hopes it shows the public that the process is really just beginning.

“We don’t have an endpoint yet. We don’t know how it’s going to turn out. We had some great questions from the members of the advisory group about options and how relationships can happen, and partnerships, and joint ventures, and there’s so many different things we have yet to explore,” she said.

The PAG will meet again on Wednesday, Nov. 20. Then, they plan to move meetings to Thursdays at 5:30 p.m. during the weeks they’ve designated over the next few months.

While no public comments will be taken at the meetings, those interested in giving the PAG feedback are encouraged to email PAGcomments@nhcgov.com with their thoughts and concerns.

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