Wednesday, June 29, 2022

Reader questions: How much has NHRMC’s ‘strategic consultant’ been paid, and will research be public?

New Hanover Regional Medical Center has contracted with Navigant, a consulting firm, for years. Readers have questions about what the firm knows about a potential sale. (Port City Daily photo / File)
New Hanover Regional Medical Center has contracted with Navigant, a consulting firm, for years. Readers have questions about what the firm knows about a potential sale. (Port City Daily photo / File)

WILMINGTON — Amid political disagreements and concerns about transparency, county officials are moving ahead in exploring the sale of the New Hanover Regional Medical Center. That process is based on research conducted by Navigant, the hospital’s consulting group — but many still have questions about that company, which NHRMC has paid $4.5 million over the last four years.

Last week, New Hanover County Commissioners voted 3-2 on an ‘intent to sell’ motion. While the move doesn’t commit the county to a sale, it does mean officials will now draft a request for proposals (RFP) to solicit explicit bids from potential buyers.

Related — Deep Dive: Here’s what the ‘uncharted waters’ of NHRMC’s potential sale look like [Free read]

NHRMC President and CEO John Gizdic laid out an ambitious and progressive plan for the hospital that County Manager Chris Coudriet said he believed could be mapped out in an RFP. Both Gizdic and Coudriet stated they’d had no conversations yet with any potential buyers — but the hospital did engage Navigant to “test the waters.”

Navigant costs

Unlike Jarrard, a communications firm hired recently by the hospital to handle public relations involved in the sale exploration process, Navigant has been NHRMC’s “strategic advisor” for many years. The Chicago-based firm has assisted NHRMC in its relationship with other healthcare companies, including Atrium (formerly Carolinas HealthCare System) — that’s the company NHRMC considered for a management deal in 2011, the company is also currently contracted with the hospital as part of a supply purchasing agreement.

According to records provided by NHRMC, Navigant has been used for 16 “strategic engagements” over the last four years, some more extensive (and thus more expensive) than others. In total, NHRMC has contracted Navigant for $4,556,659.88 since September of 2015.

Note: The NHRMC fiscal year runs from October 1 to September 30, the most recent fiscal year runs until the end of this month.

  • Fiscal Year 2019 — 4 engagements, $1,950,488.30
  • Fiscal Year 2018 — 3 engagements, $49,922.62
  • Fiscal Year 2017 — 3 engagements, $1,522,921.49
  • Fiscal Year 2016 — 6 engagements, $963,327.47

NHRMC did not offer details about these costs or its contract with Navigant since these are protected by state statute.

Public/private

The statute cited by NHRMC, stemming from a 1997 law, was designed to allow public hospitals to maintain confidentiality during ‘competitive activity.’ In essence, because the records of county-owned hospitals are public, communications and other information that would be important to negotiating a successful sale would – without the law – be public records, making it easy for outside companies to undercut or otherwise interfere with sales and purchases.

When NHRMC considered exploring a sale in early 1997, the county formed a commission headed by then-commissioner Buck O’Shields. While the commission appears not to have filed a formal written report, minutes of the May 15, 1997, special meeting reviewing the commission’s research indicate that a major rationale for considering a sale two decades ago was NHRMC’s inability to compete. Commissioners at the time noted that “legislative relief” — that is, the passage of Senate Bill 247 — would allay some of their concerns.

The passage of the law allowed public hospitals to keep competitive material private, but it does allow elected county commissioners, the Attorney General, and the State Auditor. It’s not clear if county staff would be allowed access to Navigant’s research or invoices (as was the case in California is 2005, when Los Angeles County auditors revied Navigant’s $20-milllion contract with Martin Luther King Jr./Drew Medical Center, rejecting around $200,000 in charges for “unauthorized trips and first-class travel,” according to the L.A. Times).

NHRMC did waive its protection under this law in order to share its contract with Jarrard, citing an interest in transparency. NHRMC’s communications department did review whether it could share the Navigant contract, but ultimately declined. It’s worth noting that Jarrard’s contract is more limited in scope, pertaining to messaging about the pre-sale process, while Navigant’s contract – and the research conducted under it – is likely far more sensitive in nature.

What’s next

The county will now develop a team to draft an RFP to solicit bids on NHRMC. According to Coudriet and Gizdic, an RFP could outline any number of mandates from the county — from issues like maintaining NHRMC’s ‘no layoff policy’ and living wage efforts to sweeping changing like breaking free of private insurance companies and “fee-for-service” plans as part of the shift towards “value-based healthcare.”

Critics of the move remain skeptical, citing a number of experts who point to healthcare consolidations’ tendency to result in increased premiums for customers, and layoffs and wage cuts for employees (you can read more about those concerns here). Coudriet and Gizdic, who have both emphasized that the county could ultimately decide not to sell, have responded that they can’t evaluate these concerns fully until they know what other healthcare systems are interested in a deal, which could be a complete purchase, a managing agreement, or other partnership.

A great deal of what comes next will depend on how the county crafts its RFP — and who responds. Navigant’s research will undoubtedly inform that process, although it may never actually see the light of day.

April 21, 1997 – New Hanover County Commissioners minute by Ben Schachtman on Scribd


Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001.

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