RFP responses are in: A look at what six organizations have offered NHRMC

NEW HANOVER COUNTY, N.C. (WECT) - After a nearly month-long hiatus, the Partnership Advisory Group (PAG) exploring the future of New Hanover Regional Medical Center is back at work, and the options are finally on the table.

On Tuesday, the group publicly released the responses to its request for proposals that were received on March 16. Group leadership said the delay was due to the break the group took thanks to the novel coronavirus, because the responses had to be moderately redacted to replace what they said is confidential competitive business information.

The PAG received six responses to its RFP from an array of healthcare systems from both inside and outside North Carolina, and PAG Co-Chair Spence Broadhurst said the group was impressed with the range of proposals that came forward.

“We really were excited and pleased with what we got,” he said. “The respondents really spent a lot of time digging into our strategic plan.”

Atrium Health

• Proposed Structure: Long-term lease of 40 years
• Finances: $2.17 billion in committed capital investments with $1.154 billion in first 10 years; $50 million cash to New Hanover County; $150 million for a community foundation; $791.8 million in lease payments to county
• Employees: “Will maintain the current NHRMC employment base”
• Health Equity: Plans to offer co-branded insurance plans
• Other points: Would maintain relationship with Pender Memorial Hospital; plans to offer access to 1,000+ clinical trials; wants to expand educational opportunities to Wake Forest; AA- bond rating and ability for debt sharing

Atrium’s offer would maintain a NHRMC board with at least six of the proposed nine members being from the local community. The board “would develop and recommend strategic priorities" and two NHRMC directors would be given a place on the Atrium board. Atrium also already has a presence in North Carolina, as well as an existing relationship with NHRMC through a services agreement.

Duke University

• Proposed Structure: Strategic partnership with a “joint business planning approach," where NHRMC board maintains fiduciary responsibility and oversight of assets and quality of care
• Finances: $1.9 billion to ensure capital needs for next 12 years are met; $500 million cash to New Hanover County for a community foundation “or other purposes” — or $1.35-1.4 billion in cash, if that is preferred
• Employees: Plans to keep all employees “in good standing” for at least 12 months
• Health Equity: Would seek to continue or expand NHRMC’s programs for those in need
• Other points: Would extend Graduate Medical Education programs; would make sure nurses serve on councils; expects to expand clinical research; would try to keep care local but would be able to streamline access to specialists at main Duke campus

Duke would have the NHRMC board be majority people from the NHRMC service area as well as physicians, and two people from NHRMC would be able to serve on the Duke board.

HealthSpan (Bon Secours Mercy Health)

• Proposed Structure: Purchase, where HealthSpan would be the sole corporation — but HealthSpan is open to other structures if desired
• Finances: $1.3 billion purchase price, plus $400 million over five years in capital investments
• Employees: Have implemented a $15 per-hour minimum wage at other facilities, but executive summary does not indicate any commitment to maintaining employment levels
• Health Equity: Currently expends $2 million per day in low-cost or free care, and would plan to expand coverage to those not or under-insured
• Other points: Touts experience with value-based care; NHRMC community foundation would have ability to direct future capital needs; NHRMC would be HealthSpan’s first North Carolina facility

HealthSpan would maintain an NHRMC board and would ask current board members to stay, and would give the board some input in human resources decision making.

HCA Healthcare

• Proposed Structure: Multiple options proposed, including a full purchase and a joint venture
• Finances: Depends on the structure desired, but a full buy out would mean a $1.25 billion purchase price, with a “substantial cash consideration”
• Employees: Executive summary does not mention employee retention, but does say HCA would focus on avoiding personnel shortages and recruiting through its Galen College of Nursing
• Health Equity: NHRMC could keep its existing charity care structure, or switch to HCA’s
• Other points: Would consider creating a satellite campus of Galen College of Nursing.

All structure options would include a local hospital board, with a community advocacy board formed to represent Southeastern North Carolina in the case of a full purchase. HCA also has a presence throughout the Southeast, including in Western North Carolina through the former Mission Health.

Novant Health

• Proposed Structure: Creation of a locally-governed, “next-generation” regional delivery network with NHRMC as the “nucleus,” with multiple structures offered, from management agreement to joint venture
• Finances: $2 billion cash to New Hanover County, plus 100% funding of NHRMC’s capital needs, roughly $3.1 billion
• Employees: No changes to employment without consent of NHRMC board, and would commit to maintaining existing provider relationships
• Health Equity: Would expand charity care 200%-300%
• Other points: Brunswick Medical Center would allow for “decanting” of patients and services outside of New Hanover County; touts experience with value-based care

Depending on the desired structure, NHRMC would be allowed up to two seats on the Novant board. All senior leadership would be allowed to stay and would see responsibilities expanded to cover the new regional network.

UNC Health

• Proposed Structure: Partnership
• Finances: Proposed 20% investment of NHRMC’s cash value, with additional funding possible after detailed consultation with NHRMC board
• Employees: Would maintain employee base and look to create a provider pipeline through medical school
• Health Equity: Took American Hospitals Association pledge to foster equity; would work with NHRMC to tailor a plan to address access to care
• Other points: Considering creating a Wilmington campus of the UNC School of Medicine; Began transitioning to value-based care in 2015

The board and senior leadership would be allowed to continue as-is, and two spots on the UNC board would be made available.

However, the executive summary indicates if NHRMC were to go with another partner, the university would pull its education and clinical presence from the hospital.

Co-Chair Barb Biehner said she wasn’t surprised at the wide array of responses or that local control was mentioned in each, but said the ability for NHRMC to have a voice within the larger organizations was not something she was expecting.

“The surprise was really the ability to then serve on their boards, and almost every one of them recognize the value of what has been done here in the region and the strategies that have been so successful could also be a part of what they’re doing on their either regional or our statewide level,” she said.

Broadhurst agreed, adding he was surprised that some of the responses would allow for senior leadership at the hospital to remain as well.

With the wide range of options now on the table, the PAG will have to go back to its outlined goals and objectives to evaluate each potential path forward.

Given that some have offered more than $3 billion dollars in financial incentives, while others offered significantly less but more local control, the scale is not the same for each response.

“Obviously just gives us more options<” Broadhurst said. “That’s the exciting part is it gives us more options. But it also gives us more to consider and more to work through. But we expected that, you know, we said it from the beginning that we’re going to get different options from from the different respondents. So we were expecting that and so it wasn’t a surprise to us.”

NHRMC CEO John Gizdic said portions of the upcoming meetings will be held in closed session as the PAG addresses the competitive information of both NHRMC and the six respondents.

However, the state statute the group is operating under requires there be public hearings before the group or the county commission can move into the final stages of making a decision.

Depending on the state of the COVID-19 pandemic, that could be tricky — the county commission has been meeting virtually, as have many public bodies.

Gizdic and the co-chairs stand by their decision to keep pushing forward amid the pandemic, again arguing that the virus has highlighted vulnerabilities within NHRMC that need to be addressed by a partnership.

“In the last couple weeks, COVID has pointed out how quickly things can actually change,” Gizdic said. “I think this pandemic has really underscored the need for access to capital, the need for access to equipment and supplies, the need for access to expertise that is typically afforded to large health systems.”

The hospital’s response to the COVID-19 crisis — canceling elective procedures and expending more resources than normal on supplies and personnel — Gizdic said has already had a financial effect that would have been more easily offset by having a large partner.

In a release Tuesday, County Manager Chris Coudriet further outlined the coming weeks.

“The next step for the group is to determine whether to narrow and focus their evaluation on two or three potential partners. They’ll then take that recommendation to the NHRMC Board of Trustees and New Hanover County Board of Commissioners for direction on the path forward<" Coudriet said in the release. "The public is encouraged to share feedback on the proposals through the PAG email, and we will hold a public hearing as soon as possible to ensure the community can continue to share input.”

Comments can be directed to PAGcomments@nhcgov.com.

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