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URGENT CONCERN RE: NHRMC COMPETITION

Does NHRMC have competition? Yes. Does competition affect independence, strategy or profitability? Yes. Has PAG been informed in depth about the critical importance of awareness, specificity and impacts of such competition? No.


Many of us have expressed concern that the PAG path to decision making was too controlled, rushed and likely to lead to predetermined preferences. A review of the February 6 PAG/public meeting to brief members on * “Identification of Strategic Gaps” before presenting the “Long Range Financial Plan” at the next meeting on February 20, highlights the shortcomings. This is notwithstanding 44 pages of slides being presented at that meeting, leaving minimum time for anything other than listening.


John Gidzic discussed Health Indicators in the State, ranked by counties. NHC ranks 19th, not too bad, but leaving ample room to improve. But the NHRMC seven county market area ranked 55th, in the bottom half of State and National rankings. “Improving health of our Region, that’s something we should all want”, concluded Gidzic.


A lot of NHC resident voters and taxpayers would say, not at any cost! New Hanover County comes first and foremost. To the extent we can extend healthcare services beyond those that maintain a near fully occupied, hospital Inpatient profitable core, and grow regional markets in the face of deep pocket, formidable competition without NHRMC over-investment, then yes, of course.


But those are critical qualifiers.


We were told how much our market would grow from 2017-2030:

  • Inpatient care bed demand growth 24%

  • Outpatient care demand growth 48%

  • Emergency care demand growth. 54% (page 14)


Implicit conclusion: NHRMC must add financing and staff to meet these enormous growth demands.


But PAG/public were also told that the Outpatient/Inpatient/ mix has changed dramatically.

  • it was 30/70 in 1995,

  • it was 48/72 in 2017,

  • but—there is no comparable forecast provided for 2017-2030.


What further change between 2017-2030 should be expected? Financial assumptions that do not address this key forecast component could result in over investing in Outpatient facilities.


It is indisputable, that:

  • Competition will grow dramatically during this period as other hospitals, emergency clinics, outpatient centers, drug, grocery and giant tech players jump into this market—it’s happening now, at a rapid pace. We discussed many of these competitors in our “Save Our Hospital” (SOH) remarks on January 21. These remarks are also posted to the RenaissanceWilmingtonFoundation.org and NoHospitalSale.com websites.


Since that date, formidable tech giant Google (parent Alphabet) and partners have completed in February, 2020, the public offering of its 70 clinic outpatient company, 1 Life Healthcare, launched with a $3 Billion market cap, seeking to skim the market for corporate on site or near site high quality/high tech facilities and 24x7 virtual care to proactively engage employees. In addition, Walgreen’s announced it is partnering with Alphabet/Google's Verily chronic ailment outpatient venture at a “low cost of care”, per Yahoo Finance 2/13.

  • Technology will materially increase the amount of Outpatient vs. Inpatient care, (examples-monitoring by wearables, telemedicine, improved meds and practice efficiency),

  • Competency of staff in outpatient facilities is steadily improving, so more care can be accomplished in those settings,

  • As NHRMC/consultants have noted, government pressure on cost reduction will also drive down Inpatient utilization, reimbursement levels and profitability,

  • PAG and all urgently need analysis and answers that address the impacts of these factors as they affect capital requirements, again noting Long Range Financial Plan is the topic of the next session.


In the “Ambulatory Network Development” slide presentation, the Outpatient market is addressed as ”Ambulatory Risk “. The Implementation Risk is shown as high. The “Financial Demand” is shown at the highest level of cost. Our concern is that the Outpatient Services is under such a cutthroat competitive siege, that it may not even be a profitable business for NHRMC to be in at all in a few years! That would make capital investment in Outpatient facilities and services ill-advised.


The evidence speaks for itself. Neither PAG, NHRMC, the consultants or the public can feel confidence in a Long Range Financial plan to be presented on February 20 absent a thoughtful strategic forecast of how external factors including competition from the overwhelming array of threats to NHRMC’s existing and future market for Outpatient Services (and, we think to a lesser, but important degree, Inpatient Services as well).


Fortunately, PAG does now have an “independent” Investment Banker, selected by its consultants, but capable of obtaining and conducting proper competitive analysis, and providing strategic advice to PAG and NHRMC. If the proper work is done, and all are patient, the County and taxpayers will have objective assessments of risks and returns of alternate financing and competitive strategies. Our work will not be done until this happens.


*All references are to “NHRMCfuture.org” documentation February 6, 2020.


Bill Graham

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Renaissance Wilmington Foundation

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