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Tuesday, May 21, 2024

Bidding war? Atrium Health offers new ‘$2 billion purchase option’ for NHRMC

One of the top three candidates to partner with or purchase NHRMC has doubled its cash offer. (Port City Daily photo / File)

WILMINGTON — Three months after the deadline for initial proposals, Atrium Health, one of the top three finalists to purchase or partner with New Hanover Regional Medical Center, has more than doubled its cash offer while pivoting from a proposed lease to a sale of the hospital.

The deadline to submit initial proposals to the PAG was in mid-March, but that hasn’t stopped potential partners from changing their offers as competition heated up. After initially threatening to pull out of Wilmington-area medical education if it wasn’t selected, UNC health announced last month it would partner with Novant, significantly augmenting Novant’s proposal; Novant was selected as one of the top three candidates, UNC wasn’t.

Related: First look: Six proposals to buy, lease, or partner with New Hanover Regional Medical Center [Free read]

Atrium’s new offer for an outright sale, announced in a late-night press release before today’s Partnership Advisory Group meeting, would total over $2 billion in direct payments, cash transfers, an equity and behavioral health foundation, and a new addiction treatment facility.

Atrium’s new offer is likely in response to Novant’s own $2 billion offer — the largest initial cash offer of the initial six proposals. Novant’s sizeable offer caught many off guard and upended the assumption of some that Atrium — which its considerable resources and longstanding relationship with NHRMC — would be the frontrunner.

In its own initial offer, Atrium had offered a 40-year lease — leaning in its presentation on the idea that New Hanover County would ‘not have to sell its hospital’ — that would pay $50 million in upfront cash and roughly $19.8 million in annual lease payments ($791.8 million total). Atrium also earmarked $150 million for a ‘Community Foundation’ and pledged $941.8 million in investments to the New Hanover County ‘community.’ This was in addition to Atrium’s pledge to fund NHRMC’s long-term capital goals, over $2 billion over the term of the lease.

Atrium’s new plan increases the upfront cash fourfold, from $50 million to $200 million. It would also replace the 40-year lease with a 15-year purchase plan, paying $950 million in annual installments. It would also turn over NHRMC’s net cash surplus, which Atrium estimated at $460 million, to the county (note: it’s not clear if this estimate was made before the hospital sustained over $100 million in losses due to Covid-19).

The new offer would up the foundation investment by $100 million, creating a $250 million organization with a restricted mission of addressing health care equity, behavioral health, and the opioid epidemic.
revenue for the County.

Atrium is also now offering to construct a $120 million health and addiction treatment facility on ‘Day One’ of a potential deal, nearly ten times the cost of the 100-bed facility announced by the county last year. (Note: Atrium’s press release did not indicate which entity would be responsible for operating costs of such a facility.)

Atrium’s response to concerns about ‘local control’ seem to have remained the same, with six of nine seats on a new board of directors being ‘residents of New Hanover or the surrounding communities’ and two of those directors being nominated to serve on Atrium’s governing board (no word if those two would have to come from local representatives).

Details of Atrium’s new offer — including the actual value of NHRMC’s cash surplus, the operation of the treatment center, the organization of the $250 million foundation, and board structure — have not been made public yet. It is not yet clear how the PAG will incorporate Atrium’s new offer. Port City Daily reached out the county, NHRMC, and the PAG for comment; his article will be updated with any new information as it becomes available.

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