Saturday, May 28, 2022

NHRMC reevaluates privacy needs, releases sale-exploration contracts with strategic advisor

New Hanover Regional Medical Center has released its contractual agreements with Navigant, the strategic advisor guiding the potential sale process. (Port City Daily photo / Benjamin Schachtman)

WILMINGTON — The New Hanover Regional Medical Center has released its contractual agreements with Navigant, the hospital’s long-time strategic advisory firm. The documents show the evolving nature of the sale-exploration process since its announcement over the summer.

The agreements between Navigant and New Hanover Regional Medical Center (NHRMC) were originally considered by the hospital to be protected by state law. Hospital officials say the need for those protections have been reevaluated as part of ongoing efforts to be transparent.

Related: Vetting the allegations, accusations, and theories surrounding NHRMC’s sale exploration

The release includes NHRMC’s initial contract with Navigant, dated July 23, and an addendum, dated December 11 (but retroactively effective as of October 29). Both contracts guide Navigant’s support of the hospital’s Partnership Advisory Group (PAG), but the scope of the addendum is broader; while the initial contract focuses primarily on a total sale, the updated agreement includes more options, including more specific language about maintaining local control. (Both documents can be found at the end of this article.)

Privacy concerns

Following New Hanover County’s July 23 announcement that it would explore options for selling the hospital, media outlets (including Port City Daily) requested a variety of documents, including contracts with Navigant, Atrium, and public relations firm Jarrard, Inc.

NHRMC released many of these documents, and waived its privacy rights in order to release the Jarrard contract, but in September officials said state statute protected the Navigant contract.

Recently, the non-profit Save Our Hospital group, which formed to oppose a sale of the hospital, filed a public records request for many of these same contracts. Last Friday, NHRMC provided those documents, including the Navigant contract.

While Save Our Hospital founder Gene Merritt has been outspoken about his organization’s willingness to use legal means to acquire more information about the sale process, hospital officials said that this had no bearing on the decision to release the Navigant contract.

According to NHRMC spokesperson Carolyn Fisher, the documents were released after reconsidering the public role that Navigant is currently playing in guiding the Partnership Advisory Group (PAG).

“At the time of the earlier requests, we withheld the agreement because it met the requirements outlined by NCGS 131e-97.3 and attorney-client privilege still applied. Now that the Partnership Advisory Group has a public charter and is conducting public meetings, we have determined that these initial confidentiality protections no longer apply to this particular document. Most of our Navigant engagements will continue to be confidential as pure non-public confidential strategy matters,” Fisher wrote in an email.

Asked if NHRMC and the county had at any point considered a version of the PAG that would not be public — thus maintaining statutory privacy protection — Fisher clarified:

“The PAG was always considered to be a public group. When the Navigant agreement was requested in September, how the PAG would be formed and operate and its scope of involvement was still part of a protected engagement because Navigant would be providing assistance working through strategic and legal considerations in setting up the group. There is no state statute requiring or establishing guidelines for the formation of a citizen advisory group of this nature, so this has been an evolving process.”

Fisher said that as part of the process of evaluating what the hospital could and could not release for the sake of transparency, officials wanted to make sure that Navigant’s contract accurately reflected the work that was being done; for that reason, the December 11 addendum is written to retroactively take effect on October 29, the day of the first PAG meeting.

Initial engagement vs. addendum

The initial engagement with Navigant to work on the sale exploration focused primarily on a “possible sale of all (or substantially all) of New Hanover’s assets and operations (‘the Transaction’) to a willing buyer.”

The addendum ‘updates and clarifies’ the original agreement, including more specific language about the scope of Navigant’s services and the broader range of potential ways the ‘Transaction’ might be carried out.

The scope of strategic consulting services will be broader to reflect the request for proposal process delineated in the Charter and considering New Hanover County (the “County”) and New Hanover Regional Medical Center (“NHRMC”) potentially entering into a strategic partnership with another health system or organization. Such a partnership may involve (i) the sale, lease, transfer, or assignment of the facilities and assets associated with the operations of NHRMC, (ii) management of NHRMC operations, (iii) NHRMC’s merger into another health system, and/or (iv) some other form of affiliation(s). Part of this process also will include reviewing, discussing and assessing NHRMC/County options of continuing status quo or completing an internal corporate restructuring and remaining a stand-alone County-owned public hospital (i.e., not moving forward with a third party).

Hospital and county officials, including NHRMC President and CEO John Gizdic and County Manager Chris Coudriet, have said since the sale was announced that the process would include a range of options. However, those options are not explicitly laid out in Navigant’s original contract.

Fisher noted that “retaining local ownership (or exploring other non-sale options) has always been an option if the terms of any proposed sale did not satisfy the needs outlined by the advisory group or county.”

That said, Fisher acknowledged that “since the time of that announcement, there has been increasing support for actively encouraging more partnership options to consider. This has come from NHRMC and county leadership as well as the community as a whole, so it was articulated in the resolution approved by Commissioners, the PAG charter, and ultimately, the Navigant agreement.”

Navigant’s services

The addendum does shrink the Navigant team from seven to five members, but otherwise retains the same basic project outline aside from the expanded scope of outcome options. Navigant’s services under the original agreement were (and continue to be):

  • Serve as a general advisor to, and meeting facilitator for, the Partnership Advisory Group, including staffing all meetings and providing project management support such as maintaining work plans, calendars, meeting agendas, etc.
  • Prepare materials for, and participate in, any presentations regarding Transaction to the County Commissioners and the New Hanover Board of Trustees.
  • Assist in identifying and assessing potential regional health systems as potential acquirors of New Hanover.
  • Make introductions among and between potential acquirors and New Hanover and the County for their independent assessment and evaluation.
  • Support the formulation of Transaction goals and objectives and the elements of a request for proposal issued by the County in connection with a resolution of intent to sell a hospital as described in NCGS 131E-13 (“RFP”).
  • Assist with preparation of the RFP and/or manage the contents of a data room containing preliminary due diligence materials that could be confidentially accessed by external organizations that are provided access by New Hanover or the County as applicable. However, Navigant will not distribute the RFP (or any form of an offering memorandum) nor will such RFP or memorandum or disclosure document make any reference to Navigant or its services related to the Transaction.
  • Participate in proposal reviews and provide consultative support to the Partnership Advisory Group by describing the key business terms relative to submitted proposals.
  • Provide advice to the Partnership Advisory Group on the potential benefits and drawbacks of potential buyers.
  • In conjunction with legal counsel, support the Partnership Advisory Group in identifying the key business terms and possible Transaction structures needed to achieve the desired outcomes of New Hanover and the County. 
  • Serve as a strategic and technical advisor to New Hanover in-house and transaction legal counsel.
  • Provide advice on the scope of due diligence efforts on potential strategic partners, including making site visits to hospitals, reference calls, and visiting corporate headquarters as requested.
  • Provide general consultative support as New Hanover and the County move toward any transaction closing, including supporting legal counsel and the Partnership Advisory Group with technical and consultative assistance during the negotiation of definitive agreements, the buyer’s due diligence process, and applicable regulatory processes as requested.
  • Support the Partnership Advisory Group by helping to identify other professional firms needed in the Transaction as requested, such as transaction legal counsel, a PR firm, valuation firm, special counsel for due diligence matters, and an investment bank (if necessary). 

NHRMC provided the following documents: The initial sale-exploration contract with Navigant, the PAG charter, and the addendum contract.

NHRMC – Navigant Engage con… by Ben Schachtman on Scribd

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