WILMINGTON — From the moment it was announced, the potential sale of the New Hanover Regional Medical Center was contentious. Now, the hospital and the North Carolina State Employee Association are pouring money into the Wilmington-area advertising market trying to make two very different arguments.
Both sides have invested seriously in this messaging, with New Hanover Regional Medical Center (NHRMC) planning to spend around $245,000 and the State Employee Association (SEANC) spending about $200,000.
SEANC has taken aim at NHRMC’s lack of transparent pricing, alleged the hospital is raking in disproportionately large profits, and accused the hospital of planning to sell to an out-of-state for-profit buyer. Some of these claims appear to be based on general or state-wide reports, not specific information about NHRMC; however, SEANC’s concerns about a lack of pricing transparency, while also based on general concerns, also appear to apply to NHRMC.
NHRMC accuses SEANC of spreading politicized misinformation and states that its campaign is aimed at addressing the mistaken fear that the exploration process is looking only at a for-profit sale, as well as attempting to more fully explain the reason for the sale exploration. These are considerably more difficult issues to vet out.
Port City Daily took a look at commercials from both organizations and the arguments and information that underpin them.
Two different arguments
On the one hand, there are commercials from SEANC, which have aired on television and Facebook (you can find an archive of present and past commercials here). The commercials pair criticism of the opacity of hospital pricing and what they allege is the resulting profitability, with support for North Carolina State Treasurer Dale Folwell’s ‘Clear Pricing Plan.’
SEANC has endorsed Folwell, who is actively campaigning for re-election. For his part, Folwell has distanced himself from the ads, stating he had no roll in their creation; at the same time, Folwell has reiterated some of the same criticisms that appear in the commercials, including at a recent public meeting hosted by the Save Our Hospital organization.
On the other hand, there are NHRMC’s advertisements, which have aired on radio, television, and Facebook. The campaign focuses mainly on the integrity of the Partnership Advisory Group (PAG) which was created by New Hanover County to guide the sale exploration process.
NHRMC’s advertisement features PAG co-chairs Barb Biehner and Spence Broadhurst, who reiterated what has become a constant message from the PAG — that the group will consider all options for NHRMC, including a sale, new partnerships, and maintaining local control. The commercial does not directly address SEANC’s allegations, but does include Broadhurt’s closing statement, imploring viewers to “ask those who would try to exploit this issue for political gain to stop.”
Vetting SEANC’s claims
The ‘Clear Pricing Plan’ mentioned in the commercial would set public pricing based on the current Medicare reimbursement rates for over 700,000 people covered by the State Employees Health Plan (SHP). In an interview, Folwell said he met with the NHRMC Board of Trustees and felt the hospital was “on board with the idea” of what SHP calls “reference-based pricing” but later backed out — despite what Folwell claimed would have been “millions in dollars in increased revenue” for NHRMC.
NHRMC spokesperson Carolyn Fisher said the hospital could not discuss the current rates negotiated with Blue Cross Blue Shield North Carolina (BCBSNC) for SHP members because the contract is confidential as part of BCBSNC’s contract. However, she noted that Folwell’s claim “could only be true if NHRMC’s reimbursement rates were lower than the rates being paid to other health systems under the State Employees Health Plan.”
The SEANC commercial alleged that “non-profit hospitals like New Hanover use secret contracts to bill [state employee health plan members] up to 900 percent more than Medicare.” The commercial first ran on Facebook from December 23, 2019 to January 17, 2020, according to Facebook’s ad library resource — a more recent version adds the claim that NHRMC makes “five times” the national average profit margin.
A spokesperson for SEANC identified several sources for the ‘900 percent’ claim, which all led back to conversations with Folwell or an October 22, 2018 meeting of the SHP Board of Trustees. During that meeting, a discussion of what would become Folwell’s Clear Pricing Project noted “provider reimbursement rates currently range from below Medicare to over 1000% of Medicare rates.” However, NHRMC is not specifically mentioned in the meeting minutes or materials.
The ‘fivefold profit margin’ claim comes from a March 22, 2019 article in Modern Healthcare — a piece which also does not mention NHRMC specifically. The article cites Chapin White, an adjunct senior policy researcher with the RAND Corporation, a non-profit, non-partisan thinktank; it points to White’s research showing that “in general, North Carolina medical and surgical hospitals are profitable, with operating margins averaging 9.5% in 2017—above the national average of 1.9%.”
The claim seems to run directly contrary to Folwell’s statement that NRHMC could be making more under his plan, which would reimburse NHRMC at around 177 percent of Medicare. However, without a clear look at what NHRMC actually charges and is reimbursed for services, information that is largely protected by confidential contracts with insurance companies, it remains difficult to fully analyze. This is part of SEANC’s critique of NHRMC, although one that is certainly not limited to any one hospital.
Fisher said NHRMC chose not to join Falwell’s plan because of long-term uncertainties.
“NHRMC chose not to participate in the plan because it is based on reference-pricing, which ties directly to Medicare rates. In the short-term, it may not have been a problem for us financially, but there was no way to determine how that reference point would be changed or impact us longer term. Instead, we support value-based contracts which tie reimbursements to specific goals for reducing costs while improving outcomes,” she said.
Lastly, some versions of the SEANC commercial alleged that NHRMC planned to “sell our county hospital to an out-of-state for-profit hospital.”
The commercial cites the September 16, 2019 WECT coverage of New Hanover County commissioner’s vote to approve an “intent to sell,” a resolution which despite its name could lead to a variety of outcomes, including a complete sale, new partnership(s), or maintaining local ownership. It’s worth pointing out that the actual article cited by SEANC does not discuss profit vs. non-profit or in-state vs. out-of-state buyers, and notes the “resolution of intent to sell the hospital does not require the county to sell.”‘
Ardis Watkins, SEANC’s director of government affairs, said that the commercial’s claim was also supported by repeated discussion in PAG meetings of potential buyers, including a recently finalized list of recipients of the county’s Request for Proposals (RFPs), which include a range of potential buyers or partners, including out-of-state for-profit companies. She acknowledged the PAG has also discussed in-state and non-profit buyers and partners, as well.
Watkins said she hoped the commercials would not be taken as “attack ads” but as public education. Watkins pointed to the lack of transparency in hospital pricing as “something most people don’t know about or don’t understand.”
Vetting NHRMC’s claims
According to Fisher, the main thrust of the NHRMC’s campaign is also to educate the public, specifically on the reasons for the exploration and the scope of the PAG’s mission. Fisher said ultimately NHRMC felt like “no-cost channels” could not accomplish that, in part due to the messaging by SEANC.
“While we have been working hard to get out information through low or no-cost channels, such as the website, social media, speaking engagements and media availabilities before and after every meeting of the Partnership Advisory Group, we are hearing that many people still don’t understand the reasons for the exploration or that the advisory group is exploring a full range of options beyond a sale,” Fisher said.
“There are complicated issues and questions about the future of NHRMC that, unfortunately, have become lost in the singular focus and fear of sale. This has been exacerbated by groups like the Raleigh-based State Employees Association of North Carolina, which has decided to seize on local interest in healthcare and shift attention to their agenda. They are spending heavily in this market, attacking NHRMC and claiming that there is a plan to sell NHRMC to an out-of-state for-profit corporation. This is simply not true.”
Part of NHRMC’s claim — that all options are being considered— has become somewhat an article of faith. Both skeptics who claim there is a pre-arranged sale — a “done deal” — and supporters who urge the public to trust the PAG are hamstrung by hospital confidentiality: if there were emails or documents pertaining to such an agreement, they would likely be protected by state statute and would not be made public.
Thus, in the general public, critics have no smoking gun and supporters have to acknowledge a body of documents they cannot access, including past conversations between NHRMC and Navigant, its consulting firm, and other healthcare systems.
Instead, NHRMC has asked the public to put its faith in the 21-members of the PAG. While the PAG includes NHRMC CEO John Gizdic and New Hanover County Manager Chris Coudriet — who are privy to more classified information than the rest — most members have performed their duties in public. And, as NHRMC and the county have both pointed out, the meeting minutes, presentations, and audio recordings have all been made public.
While PAG members have vehemently denied they are a ‘rubber stamp’ and have repeated, just as emphatically, that they will consider all options, including a robust exploration of not selling NHRMC — they have consistently had difficulty explaining the motivation for exploring a sale.
In an interview last month, Broadhurst acknowledged that he — along with most of the PAG — were still playing “catch-up,” attempting to wrap their heads around the complicated market forces in the healthcare industry. Broadhurst promised that when the PAG made a final recommendation to the county it would be able to articulate its reasoning and that it would be able to make a “hell of a case” if that recommendation was for anything but keeping NHRMC county-owned.
Still, the idea that the sale process could proceed nearly to its final stage without ever fully articulating the reason for a sale in the first place has not sat well with some members of the public. By Broadhurst’s own admission, the process has been earnest and transparent, but also confusing.
This week, the PAG began getting into the specifics of what ‘independence’ would look like, including three main options: forming a new non-profit parent company (‘SystemCo’), becoming a hospital authority (a different type of state-authorized public hospital), or becoming a private non-profit (instead of a public non-profit, like the current organization).
With this chart in mind, a group member asks (paraphrased):— Emily Featherston – WECT (@EmilyWECT) February 6, 2020
Are we exploring staying independence, or are we proving independence isn’t viable?
Group members respond they think it depends on what information they get back.
According to a WECT reporter who attended the meeting, one group member asked if the PAG was really exploring staying independent or if the group was effectively proving independence wasn’t a viable option.
The answer: it depends on what comes back from the Request for Proposals.
Like many other aspects of the sale exploration, hard and fast answers are difficult to come by — and are often deferred to some future step, when more information is available.
This is in large part because the state of modern healthcare is incredibly complicated, with a lot of moving pieces. The most recent meetings have started introducing the PAG, and the public, to the details behind what was previously discussed mostly as metaphors — ‘headwinds,’ ‘uncharted waters,’ ‘rough waters.’
These details are important, and NHRMC and the county have made considerable efforts to make them public. But they don’t quite add up to answers, for the public or the PAG. And they also come late in the game, over six months since the sale exploration process was announced.
This doesn’t mean these answers won’t be had. And it doesn’t mean that the PAG — and by extension, the hospital Board of Trustees and county Board of Commissioners — will discard options for remaining independent. But it does help illustrate why confusion and skepticism have remained a pronounced part of the public’s view of the sale exploration.
Information about the PAG members can be found here, and the group as a whole can be contacted at PAGcomments@NHgov.com.
Send comments and tips to Benjamin Schachtman at email@example.com, @pcdben on Twitter, and (910) 538-2001