Thursday, April 18, 2024

It’s a high-tension moment as a board in flux prepares for the monumental NHRMC sale decision

Built in 1967, New Hanover Regional Medical Center's main campus has outgrown itself, with physicians concerned that without outside financial resources, the hospital will continue to fall behind the community's needs. (Port City Daily photo/Johanna F. Still)
Built in 1967, New Hanover Regional Medical Center’s main campus has outgrown itself, with physicians concerned that without outside financial resources, the hospital will continue to fall behind the community’s needs. (Port City Daily photo/Johanna F. Still)

WILMINGTON — On Monday, the New Hanover County Board of Commissioners will make the most consequential decision in the region’s recent history: the sale of New Hanover Regional Medical Center, the county’s largest employer. They do so at a unique political moment, as the board experiences a deep divide over the decision and certain upheaval in the coming election.

Up for a vote: the multi-billion dollar deal with Novant Health, which — if approved — will hand NHRMC and its assets over to a private, non-profit company. In exchange, New Hanover County will receive a massive lump-sum payment, the lion’s share of which is destined for a new $1.25 billion community foundation.

It’s that foundation that has been the most contentious issue in the final weeks leading up to the sale. While the final public hearing and Partnership Advisory Group meeting have already passed, the details of the foundation have yet to be finalized. Key components of this all-important board’s structure remain in limbo with just days left before the final vote by commissioners. At this point, it’s still not clear if the community foundation board will be subject to open meetings laws or if its financial dealings will be subject to any public oversight.

These questions, and others about the sale, take place against a complicated and unsteady political backdrop. With commissioners Pat Kusek and Woody White both vacating their seats at the end of the year, there will be at least two new board members who inherit the sale decision after the election. Commissioner Jonathan Barfield, Jr., while polling strongly, is not guaranteed a victory in his re-election.

And then there are Board Chair Julia Olson-Boseman and Commissioner Rob Zapple, both Democrats but deeply at odds in their views on the foundation, the sale, and the process in general. A Democrat, Olson-Boseman has shaken up expectations that she would vote alongside Zapple and Barfield on key issues; instead, she has sided with Republicans White and Kusek on several votes, including the Intent to Sell resolution that started the hospital sale process, as well as the move to defund WAVE.

Barring state intervention, nothing seems to stand in the sale’s way. A majority of the board (Kusek, White, and Olson-Boseman) solidly support the sale and will no doubt vote cast their vote in favor of it Monday. Zapple, the lone outspoken critic of the sale and its optics, lacks confidence in the arrangement as it stands and is unlikely to vote yes while major questions remained inadequately addressed.

Barfield is not showing his cards. Asked five different ways for his stance, he maintained he would make his position known Monday. While some voters will definitely be watching to see which way Barfield votes, it won’t ultimately swing the board’s decision either way.

The political import of the sale has reached into the campaign for three seats on the Board of Commissioners, including Barfield’s and the open seats left by White and Kusek. Early in the campaign, the sale process was still much more open-ended, and it was uncertain if it would wrap up before the election, between the election and the swearing-in of new members, or after a new board was seated in late 2020. The issue played out in the primary, with many candidates, particularly Democrats, against the sale (or in favor of slowing the process down). During a more recent candidate forum, Democratic candidates Kyle Horton and Leslie Cohen both took issue with aspects of the sale.

In the event the successor board would want to get out of the sale prior to closing, it’ll cost the county $25 million to break the contract.

Much like the national debate surrounding the late Justice Ruth Bader Ginsberg’s replacement, the community remains divided on whether this lame-duck board should be tasked with carrying out such a monumental decision with the election just weeks away, leaving two or three new members to inherit the results, for better or worse.

Because the county opted not to put the sale on a referendum, the public is left with an outgoing, divided board as its voice.

In July, NHRMC set a goal of getting the agreement signed by Oct. 31 the latest — three days before the election. That self-imposed deadline was later moved up to Oct. 19. Last Friday, the county announced the vote would take place Oct. 5.

Despite questions about whether a new board would make the same decision, county staff and stakeholders have trudged onward at the direction of the majority in their efforts to wrap up business on the sale before the election.

New Hanover County Commissioner Rob Zapple said the process has lacked transparency, ignored input from the medical community, and risked losing local control "of an enormously valuable asset." (Port City Daily photo/Mark Darrough)
New Hanover County Commissioner Rob Zapple said the process has lacked transparency, ignored input from the medical community, and risked losing local control “of an enormously valuable asset.” (Port City Daily photo/Mark Darrough)

Zapple has questions, White calls them ‘bullshit’

During last week’s Board of Commissioners meeting, Zapple repeatedly attempted to interject questions and concerns about the final phase of the hospital sale process, specifically about the foundation’s structure.

Zapple sparred, directly and diplomatically, with Don Munford, the county’s outside counsel. Munford was hired to draft the organizing documents for the community foundation and, citing his lack of faith in and apparent disdain for sunshine laws, deliberately crafted the foundation to be a private financial foundation — not a public body.

In addition to concerns about whether the foundation was public, meaning its records and meetings would be open to the public and investments likely subject to oversight, Zapple also tried to weigh in on term limits.

He was largely unable to get traction with his fellow commissioners, who seemed to defer to Munford’s opinions. In fact, in less than two-and-a-half minutes, they approved a concept Munford brought up on the spot regarding extending term limits to a maximum of nine years instead of six years as drafted, 4-1.

Zapple’s inquiries appeared to annoy fellow commissioners; more than once, Olson-Boseman called the question while Zapple was struggling to get traction on a question.

In the grander scheme of things, the majority — especially Olson-Boseman and White — did not share Zapple’s concerns about transparency or skepticism about whether the foundation was well structured to serve the community.

This week, Zapple tried to air his concerns during the final public hearing for the sale process. Without enough time to get to 13 specific points, Zapple submitted his list to the county clerk after the meeting adjourned, asking her to submit them to the public record.

Olson-Boseman declined Zapple’s request.

“No. Nothing is submitted after the gavel. The purpose of the public hearing for us to hear from the public not for the public to hear from the Commissioners,” she wrote in response to the county clerk, manager, attorney, and fellow commissioners.

White followed up on the email with more pointed words.

“Zapple can continue to peddle his bullshit elsewhere but I will continue to strongly object to him doing so in the formal record, especially when his talking points would go unrebutted. Each and every point he makes in this “manifesto” is … rebuttable by accountants and lawyers — neither of which is he,” White wrote.

Zapple replied, objecting to White’s language and insisting again that unanswered questions about the deal with Novant were a problem.

“Please stop with the abusive language and personal attacks that are meant to bully and intimidate — they don’t work. Your persistent use of foul language not only reveals a lack of creative thought but is also an embarrassment to you and our County Government.

“The questions I have raised come from a thorough reading of the 160 pages Asset Purchase Agreement, they are not a part of some other agenda. It is concerning to me that we are this deep into the process and there are still significant gaps and legitimate unanswered questions in the final contract,” Zapple wrote.

In an interview, White stood by his language.

“From the very beginning of this process, Rob and his fellow cronies have intentionally used words such as ‘corruption ‘and ‘liars’ to suggest that Pat, Julia and I have committed crimes and acted unethically. Those words are much more ‘foul’ to me than calling them what they really are — which is bullshit,” White said.

Weary from allegations

White’s unwavering position speaks to a sense of burnout that seems to have affected those closely involved with the process. In nasty emails, public forums, and online comment sections, nearly all stakeholders have at some point been falsely accused of setting themselves up to personally profit from the sale.

Though some catch-alls that would eliminate this possibility are still missing from the proposed agreement (for example, nothing would stop a current trustee or commissioner from contracting with the foundation years down the line), no one has yet come forward with evidence of malfeasance.

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

Exasperation at these repeated allegations is likely contributing to the majority’s desire to go ahead and finish the job at hand. Asked whether she was comfortable with members of the public attending the community foundation’s meetings, Kusek hit on this point:

“Yeah, I don’t think — but that’s not the issue. The issue is we need to get that foundation done. Who attends the meetings and that kind of stuff — things aren’t going to be done in secret, okay? Not the way I don’t think anybody would envision that foundation to be,” Kusek said.

“It’s another stall and delay tactic,” she said. “For someone who’s opposed, there will never be enough time.”

Kusek said she is worn out after a year of hearing false accusations aired out publicly. Friday, a local judge denied Save Our Hospitals’ motion to delay the sale because of alleged open meetings violations. One of the group’s major claims — that the county hadn’t provided a single document requested — turned out to be unsubstantiated. This week, officials faced critique for the structure and proposed lack of public access to the community foundation.

“What I think is that all of these, all the jabs and all the criticism of the community foundation is just work by the people who don’t want this hospital sold at all. Just to try to bring something else up,” Kusek said.

“I think the way that that community foundation is structured is fine. I don’t think that people should get on a soapbox and beat the barrel about having it public. Again, I think it’s just another nit-picking thing for these people who have fought this thing for a year to try to do something else to stop it,” she said.

Olson-Boseman has been less vocal about her frustration, but her annoyance was clear during the most recent Board of Commissioners meeting. In ending the meeting after Zapple’s closing statements, Olson-Boseman said — not for the first time — that she resented “continued suggestions and innuendos.” She’s repeatedly defended the transparency of the process and denounced allegations (or insinuations) that anything corrupt or unduly secretive has taken place.

A registered Democrat, Olson-Boseman has shaken up expectations that she would vote alongside Zapple and Barfield on key issues, most notably marking this apparent political shift while dismantling and restructuring Wave Transit last year. Instead, she has tended to side with the board’s Republicans and remains strongly teamed up with White and Kusek on the sale.

Zapple and Barfield

New Hanover County Chairman Jonathan Barfield, Jr. voices opposition to the privatization of NHRMC. (Port City Daily photo/Mark Darrough)
New Hanover County Chairman Jonathan Barfield, Jr. voices opposition to the privatization of NHRMC. (Port City Daily photo/Mark Darrough)

As neither an account nor an attorney (White and Boseman are both attorneys; Kusek is a financial advisor), it’s worth pointing out Zapple was the only person at last week’s meeting to voice concerns about the applicability of a statute the county’s counsel (being paid $25,000 to put together this deal) believed was irrelevant. Zapple’s assumptions were backed up by a recent opinion shared by staff and counsel at the Local Government Commission.

“As I tried to remind them offline, I said, ‘I know how to read,'” Zapple said in an interview Wednesday. “You don’t have to be a brilliant analyst at all. It was all right there.”

While other commissioners have grown tired of false accusations, Zapple has been vilified in his own right, having been grouped in with dissenters who aim to stop the sale. “I’m not being an obstructionist — I’m anything but,” he said. “I just want to as good a deal as we possibly can get.”

Though he’s been written off as being part of a more conspiratorial group, Zapple said he’s only asking questions and looking for satisfactory answers. He said there’s absolutely no evidence that his fellow commissioners will profit from the sale, and outside of being critical of the process itself, said he’s never publicly defamed them or insinuated wrongdoing.

“Something about this one, I responded,” he said of White’s email. “And frankly, I’m glad. It’s ridiculous as he comes forward with this abusive and profane language and thinks this is going to convince me to do anything.”

One of the questions in his 13-point comments involves the source of $35 million, a difference he realized when comparing the total $1.9 billion deal to the $1.935 billion in total allocations. “They start throwing around these numbers like its Monopoly money. And it keeps losing its value,” he said.

Staff have assured him it won’t end up coming from the county’s general fund but can’t say for certain where it will come from, he said. On Tuesday, the PAG discussed the issue, clarifying that the money would come from sale proceeds and, if not needed to cover closing costs, would be transferred to the community foundation endowment. Still, Zapple’s point was that he still had questions (and difficulty getting answers) about significant bundles of money.

“I stop and think about the hundreds of thousands, let alone millions of dollars we’ve paid accountants and lawyers to make this stuff clear for us in this APA and I go, ‘Wow. A $35 million question mark seems to me to be a pretty big deal.'”

Asked if he feels boxed out of the process as the sale is just days away, Zapple said communication has been difficult. He said he’s grateful for the work the PAG and staff have done to get them to this point but wishes he and the public had more time to review the still unfinished sale documents ahead of the vote. “I feel it has been unnecessarily rushed,” he said.

Seemingly isolated on the board for his outspokenness, he said the constant stream of community support keeps him from feeling like he’s on an island of his own. “That’s what kind of keeps me — that’s the landbridge between the island and the mainland I guess for me, are those people reaching out — knowing I have some support,” he said.

Barfield has also been on his own plane. Tight-lipped about his sentiments about the sale, Barfield has been quieter in his public questioning and critique of the sale. “Every morning when I wake up, I’m pastor Barfield. That’s my first title. That’s the way I carry myself,” he said. “My faith definitely helps inform my decisions.”

Last year, Barfield joined Zapple in voting against the intent to sell resolution, which passed 3-2, launching the exhaustive so-called “partnership” process, a phrase stakeholders eventually dropped in order to call it what it had clearly become: a sale. Then, he wanted a one-year waiting period before a decision was made and for the public to have a more direct say in the vote.

“I feel like it should have been something that the voters voted on. Being that the voters passed a referendum initially to build a hospital. And ultimately, that’s what I would have liked to have seen. Even now. But being that that’s not the case, you work with what you have,” he said.

As the only board member seeking re-election this year, Barfield said he does feel additional pressure with how he casts this vote. “Without a doubt. It definitely puts a different level — but at the end of the day, you just do what you think is right.” Either way, he has votes of his own to win or lose.

He described the proposed agreement as still a moving target, with tweaks coming in daily. Personally, he said he has enough time to review the documents in their entirety through the weekend.

But has the public had enough time?

“I would like to think so although I’m sure there are some that feel they haven’t had enough time,” he said.

Asked if he was comfortable with members of the public attending future community foundation meetings, he said he’s still researching how similar foundations are structured. “I’m fine either way, I guess at the end of the day.”

After more than a year, that end will come on Monday, Oct. 5. While the vote itself is a forgone conclusion for most, the details matter. Namely, the structure of the $1.25 billion community foundation, when it is finalized, will reverberate for decades.

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