Let's Stop the Rush to Judgment on NHRMC!
Should NHRMC (New Hanover County, NC Regional Medical Center) be Sold?
NHRMC Has Come A Long Way In The Last Decade:
The quality of care, operations, staff and morale have notably improved.
Management recognized the need for dramatic change and, using expert consultants to engage staff, launched a continuous improvement program across the hospital.
The result has been an improvement in operating margin from 3% to 6%, with rapid growth and no layoffs.
NHRMC has grown into an inpatient health care delivery “monopoly,” reportedly accounting for nearly 80% of market in the Greater Wilmington Region.
As a non-profit, it generated a $79 million surplus to reinvest last year.
Take the Money and Run?
Now we are told we have a Billion Dollar Windfall if we sell it and that there are market timing, “uncertainties” and “trends” favoring sale.
The buyer who will pay the big bucks will likely be a public company that has to scoop up the “surplus” as profits to repay the billion dollar investment. That ends the reinvestment in our healthcare.
By reducing headcount to cut costs, additional profits can be generated, even as our healthcare needs grow by a significant percentage each year. And, what happens to quality?
Are the insiders, uncertainties and trends right? Maybe there is a better way—
We, The People of New Hanover County, own a great hospital.
It is positioned to get even better through continuous improvement. Should we sell it right now? There will be a big payday for insiders so they are advocating sale, but they have a huge conflict of interest.
Insiders proposed a different deal in 2011, but the rush was the same.
We refused a management takeover by outsiders that would have enriched insiders eight years ago. Much of the billion dollar valuation has resulted from an additional eight years of operational improvements. A sale without an objective expert assessment and public input would be irrational, but that is what is being presented, in a rush to judgment. With the value of NHRMC increasing annually as it is, why are we in such a rush?
A Timetable Has Been Set, Allowing only a Few Weeks to Decide to Sell
New Hanover County Commissioner Rob Zapple confirms the sudden rush to a Billion Dollar decision to sell NHRMC in an OP/ED article, Star News, August 9, 2019. It is a must read (link below). Following are a few highlights and a recommendation:
Title Says it All—“Local control is the right prescription for hospital”
Commissioner Zapple raises many concerns— about that rush to judgment, health care quality, a new owners motivation to reinvest, continued employment, salary maintenance for the 7,000 employees, and how the process should proceed.
Is the Deck Stacked?
A process driven by insiders has already reached out to other healthcare systems as possible buyers, hired a public relations firm to push the sale, leading to scheduling
two quick public hearings in the vacation days of August and an early September Commission meeting decision on a “Resolution on Intent to Sell”, Presumably, opposition has no time or expertise to raise objections. That’s a stacked deck.
A Proper Process?
Zapple says there’s a Board of Directors for NHRMC that should consider
the matter first, and explore it properly. (Surely that means taking time to hire objective
expert healthcare investment bankers or consultants to evaluate all options and make a
recommendation that withstands public scrutiny.) Then, the Board makes recommendations to the Commissioners. Deciding what to do “should include allowing the people to vote on the matter at the next election.”
What Would the County Do With a Billion Dollar Windfall?
Dramatically reduce our taxes? Dream on! But there are innumerable ways to use the money. Paying down debts, reserves for storms, protecting against coastal flooding, affordable housing, education initiatives, and other healthcare needs are examples.
Investing in the Innovation and high paying Jobs that change us from a Tourism and Retirement driven Region to a Tech Powerhouse?
Readers who review our 30 blogs on the RWF website know it would take sizable resources to do what we propose in total to “create a world class region”, and what a leap forward that would be. But we must be objective and urge careful prioritization of what to do with any windfall funds.
To keep the process objective, we would advise the County use conflict free expert
consultants to help us sort out investment priorities with the best return on investment.
Would You Settle for Up to a Half Billion Dollar Windfall and Retention of Local Control?
The world of finance is awash with billions to invest, and interest rates are rock bottom. It may be timely to time to extract part of NHC’s value but keep at least 50%+ ownership and control. Those “objective healthcare investment bankers or consultants” we urge be used, (see above in “A Proper Process?”) will be able to tell us the alternative, least cost ways we could do that. Hospital Revenue Bonds, for example, could be structured so little or no control is given up. This gets technical.
In Summary, let's leave it that we can have up to a half portion of that dream windfall and do wonderful things to improve the quality of life in New Hanover County without giving up our lifetime healthcare future because of a high bidder. But above all, let’s take the time to do this properly!
Rob Zapple’s must read editorial is here.