Sunday, July 21, 2024

Novant was frontrunner for Pender hospital sale, no other providers considered

Pender County commissioners and Novant Health came to an agreement to sell the Burgaw hospital. (Port City Daily/Amy Passaretti Willis)

PENDER COUNTY — County commissioners and officials at the Pender Medical Center have reached a shared vision on the future of healthcare in the rural county after months of negotiating and evaluating the best path forward.

READ MORE: County pens agreement to turn over Pender hospital to Novant

In the last six months, the county has doled out more than $43,000 to Ascendient Healthcare Advisors to analyze the demographics of the area and help guide the board of commissioners whether it should stick with Novant or partner with another entity. 

Commissioner chair Jackie Newton told Port City Daily Tuesday the county did not ever go to market for other providers, yet indicated it was certainly willing to; that was the initial plan when hiring Ascendient.

“When Novant circled back and gave us what we had wanted initially, there was no reason to,” she said.

The county has owned the hospital since 1951. Novant Health inherited the contract as its healthcare provider when it purchased New Hanover Regional Medical Center in January 2021; NHRMC had overseen its operations for 23 years.

The data Ascendient brought back to commissioners in February indicated additional services were needed for residents and the county could financially and demographically handle expansion. Rather than switch providers, the county announced Friday it was going to sell the hospital to Novant. 

All Pender commissioners are on board with the move, per a unanimous vote.

“Pender County wanted a partner to join in our vision for expanding services and a more robust healthcare community for the aging, young, and general,” Newton told Port City Daily. “We, as a local government, have no business being in the hospital business. It’s too sophisticated. We have a fiduciary duty to ensure medical care available is the best we can bring to the table.”

As part of the deal, Novant agreed to funnel $50 million in capital and operational money into Pender County healthcare services over the next decade. This does not include the price of the hospital, which is still being negotiated and will be finalized by Sept. 30, with closing planned six months after.

During a press conference Wednesday, Newton told media rural hospitals across the country are struggling and the agreement ensures Pender’s hospital remains accessible.

“This means our hospital stays in Burgaw,” she said. “Second only to our school system is the quality of our healthcare.”

The board of commissioners brought Ascendient’s research to the bargaining table, Newton confirmed. They requested an investment in the community by Novant prior to any consideration of a hospital sale. 

Novant Health’s coastal region president Shelbourn Stevens said Wednesday during the press event he couldn’t pinpoint whose idea it was first. Rather, the decision to sell the hospital was a collective agreement “during conversations over the last year or so.”

Ascendient provided commissioners an overview of similarly situated communities to decipher what level of care Pender County demographics would support. It showed area patients need services predominantly provided in surrounding counties and named Novant NHRMC the “market leader” for every service. 

A Pender County health assessment, conducted by the county’s health department, resulted in 15.4% of residents reporting trouble with gaining access to healthcare in the last 12 months.

“Novant understands not only big hospitals, they also understand small hospitals and the importance of healthcare being local, right from the outset,” Pender Medical Center president and COO Ruth Glaser told Port City Daily Monday. “And that’s been very positive for us.”

Glaser told commissioners in November that NHRMC helped “stabilize” Pender’s rural facility and has infused more than $60 million into health operations and tripled employees’ salaries. Novant also ensured all Pender employees earned a minimum of $15 per hour and has invested $65 million in retaining positions.

During 2022, Novant provided free charity care to 1,665 individuals in Pender earning at or below 300% the federal poverty line. 

Still, the need for additional services is increasing alongside Pender’s population, the fifth-fastest growing in the state. The county has a population of 65,282, and areas such as Hampstead are seeing a 60% or more spike in population between 2015 and 2020. But healthcare services are not keeping pace; however, Novant’s Scott’s Hill hospital will be able to serve the southern portion of the county when it opens in 2025.

ALSO: Pender begins construction of expanded Scotts Hill infrastructure

“At the first of the year, we started negotiating with Novant,” Newton said. “Until we had Ascendient give us that [data], we had no idea what services our citizens were entitled to. Armed with that, we were able to go forward and have some productive negotiations with Novant, which took time.”

She also said Pender is in need of economic growth. Ascendient’s data showed more than 11,000 employees working outside the area in counties such as New Hanover, Wake, Cumberland and Mecklenburg — all which have significant health resources.

Newton, who has called the decision on the hospital’s future “a generational” one, said it is “imperative” to secure financial stability to avoid the hospital’s closure. The county was receiving about $50,000 annually for New Hanover Regional Medical Center and then Novant to run the hospital, which former commissioner chair David Piepmeyer said in October was “not to the county’s benefit.”

Pender Medical Center president Ruth Glaser, commissioner chair Jackie Newton and Novant Health’s coastal region president Shelbourn Stevens address media about the negotiations at Pender Medical Center Wednesday. (Port City Daily/Amy Passaretti Willis)

Integration already underway

Pender County commissioners have been exploring alternatives for their healthcare system in the last few years, extending the operating agreement with NHRMC in 2019 and then with Novant in 2021.

The current agreement is set to expire July 13 and last summer commissioners began to discuss how to move forward. They hired Ascendient in December to help guide the county through the selection process. 

Additional invoices for continued work — broken into phases by Ascendient — are pending in the next two months, according to county staff.

Consulting and data Ascendient brought to the table was a “methodical process,” Glaser explained.

She said she doesn’t expect any disrupting or negative after-effects once the asset purchase agreement is signed by fall.

“Novant has seen us as part of the organization and a lot of integration has been underway,” Glaser said.

For example, Novant has increased salaries for Pender hospital workers, who will transition to Novant employees once the deal closes.

At this point, it’s merely dotting the “I’s” and crossing the “T’s” to Glaser, noting the purchase agreement “formalizes” the partnership already in progress.

“I liken it to being a renter versus an owner,” Glaser said. “Being a full part of the organization and to be owned by Novant really makes us a solid partner and there for the long haul rather than a lease agreement that somebody can decide to change.”

Should the agreed upon negotiations not work out, Newton said legal safeguards are in place with final documents to ensure the county has recourse.

Within the first five years, Novant is guaranteeing upgrades to the current hospital, right now considered a critical-care access facility. The healthcare provider plans to transform Pender Medical Center into a “true” community general hospital, Newton explained, to provide diagnostic and therapeutic services — surgical and non-surgical.

Currently, the hospital offers emergency care, post-acute care, skilled nursing, rehab and some surgical services; all will expand per Novant’s investment.

Stevens explained Novant will be increasing acute access and ambulatory services to include adult primary care, cardiology, gastroenterology, orthopedics and urology. It will also retain Pender hospital’s designation as a critical access hospital, one of commissioners’ five main goals with the deal.

Pender has fewer beds in its hospital and facilities than peer counties and the state overall. Data from Ascendient shows Pender Medical Center has a busy emergency room, with 16,489 visits in a year. Whether Novant plans to add more beds in its expansion is not clear at this time.

The five-year commitment is what Newton called “the last point of contention” to flesh out.

Novant has also agreed to assist Pender County in improving access to primary and specialty care and to recruit a more diverse system of providers to the area.

“The key to this as a rural community is Novant’s involvement in the rural family medicine residency program to train and encourage the retention of rural physicians in rural communities,” Newton said.

According to the county’s 2022 health assessment, Pender County is a health professional shortage area. As of 2019, the county reported a physician’s ratio of 1 primary care clinician for every 2,009 residents — well above the recommended ratio of one to 1,500 residents; the state average is 1 to 935 residents.

For physicians, specifically, Pender County reported 21 in 2021, at a rate of 3.25 per 10,000 residents, a drastic decrease from the state rate of 27.7 per 10,000 residents. 

Glaser called the residency program a “perfect example” of Novant’s investment. As part of Novant’s deal with NHRMC, it promised a rural residency program would be developed and chose Burgaw as the location. Next summer the first residents will begin the program, in conjunction with Black River Health Services, a family care nonprofit medical office with three locations in Pender County.

“I’ve seen how New Hanover was good to us for a number of years and with Novant, it’s continued to describe a trajectory of change and positive change, by this little hospital,” said Glaser, who has been with Pender Medical Center for 13 years. 

Glaser has been an advocate for retaining Novant as the local provider since commissioners began to review options. She told the local leaders in December, “Novant is committed to Pender County,” and also indicated operations should continue as is. 

As Newton pointed out, many people are “vehemently” against Novant, while another faction “applauds” its services.

When NHRMC was purchased by Novant, fear of employee layoffs and rising costs were at the forefront of opposition. Glaser said she does not worry about that happening at Pender Medical Center since the staff has been working through the process.

While some residents may think they’ve been left in the dark during the process, Newton said both the county and Novant were under a non-disclosure agreement the last few months.

“I regret not being able to fully discuss and be as transparent as we would have liked,” she said. “Due to ongoing negotiations, both parties were not at liberty to discuss where we were in the process.”

During negotiations, Novant agreed to allow Pender County to designate the majority of the hospital’s governing board. In early discussions, Newton said one of the reasons commissioners were going to explore other providers was because they lacked a “seat at the table.” Now, they have input in the decision-making process.

The next few months the commissioners and Novant will obtain needed regulatory approvals and sign off on a price tag for the purchase. Stevens said there’s a lot of due diligence left, including a fair market assessment of the facility. At this time, neither Newton nor Glaser were able to comment on the closing cost per confidentiality agreements.

“It’s going to take time to make the transition and work out the finer details but I’m encouraged and hopeful that will be done,” Newton said. “We feel it’s in Pender County’s best interest going forward.”

Attorney General Josh Stein has to give his stamp of approval as the final step — as done in New Hanover’s sale to Novant.

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