WILMINGTON — On Monday, county commissioners will vote on the latest step towards a sale of the New Hanover Regional Medical Center, and will likely also discuss how some of the proceeds will be managed.
Commissioners will vote on whether to approve a ‘letter of intent’ (LOI), which would allow final negotiations to move forward. If approved, county staff expect a final, legally-binding agreement would be ready in September or October, although it could, in theory, be ready sooner; when a final version is ready, it would be made public at ten days prior to a public hearing and a final vote by commissioners.
Last week, the Partnership Advisory Group selected Novant (along with UNC Health) as its recommendation for a partnership with the hospital. The recommendation was approved earlier this week by the NHRMC Board of Trustees as well as the Pender Memorial Hospital Board. According to NHRMC, medical staff have also indicated support for a deal with Novant.
Public officials, and Novant’s proposal, have assiduously avoided the word ‘sale’ — favoring first ‘partnership’ and more recently the phrase ‘full integration.’ Still, the $2 billion deal will transfer ownership of NHRMC (and thus its assets) from New Hanover County to Novant, which will serve as the ‘ultimate parent’ of the hospital. The arrangement was described as “maximizing proceeds at closing” but also touts that a local board will manage operations and ‘preserve NHRMC’s local identity and community input,’ according to Novant.
Roughly $2 billion in proceeds
Questions about what will become of the nearly $2 billion in proceeds paid to New Hanover County at closing remain.
During this week’s NHRMC Board meeting, four major ‘buckets’ of fund management were suggested. According to New Hanover County, these four funds weren’t the result of any formal county vote or mechanism but came from “one-on-one discussions among county leaders, trustees, and Commissioners” — although not all commissioners were involved.
The four suggested funds are:
- $1.25 billion or more to “provide financial support to health and social equity, local education, community development, and community safety.”
- $300 million or more for revenue stabilization to handle shortfalls from everything from pandemics and natural disasters to economic recessions and debt-management
- $300 million or more to handle “transition and trailing liabilities” as employees move from NHRMC to Novant, which could include support pension, retention, and resiliency plans
- $50 million or more for mental and behavioral health, including substance abuse
It remains unclear how these funds would be managed and disbursed.
In emails to Port City Daily and on social media, residents have asked if there will be ‘caps’ on the NHRMC employee fund — in essence, to prevent it from serving as a golden parachute for administrators and to otherwise ensure equitable disbursal. They’ve also asked if the revenue stabilization fund could be used to artificially lower tax rates or if it would be strictly reserved for handling economic shortfalls resulting from unexpected crises.
Moreover, there have been many questions about how the $1.25 billion fund would work. In addition to being the largest of the funds by a factor of four, it also has the broadest scope. The county has consistently said that, under their interpretation of state statute, county government could essentially use the funding for anything that is consistent with the county’s strategic plan — in other words, nearly anything the county spends money on now, it could fund in the future with proceeds in the $1.25 billion fund.
Some have drawn an analogy to the sale of non-profit Mission Health to for-profit healthcare company HCA, which came with it the state-mandated creation of the non-profit Dogwood Health Trust, focused on health equity. This was, by and large, because the assets from the sale of a non-profit have regulatory strings attached — non-profits can’t be sold in the traditional sense and when they are sold, the proceeds are constrained to charitable use.
New Hanover County has said since the partnership exploration was announced that it believes the proceeds from a sale would not be constrained in the same way. The difference: while Mission served Asheville and the surrounding region, it was independent, not government-owned and NHRMC is ultimately owned by New Hanover County. It’s worth noting that some, including the Save Our Hospital organization, have contemplated challenging this legal interpretation or calling the Attorney General’s office in to review it.
While the county is confident it can legally receive and invest the proceeds from the sale of NHRMC, it remains unclear how the fund would be managed. Even if the county used the fund to support its entire annual budget, it would still take years to spend, so the fund will have to be managed and overseen. It is likely the fund will be used to invest in specific projects — but which ones, and with what oversight?
Some of these questions will take numerous conversations to hash out, but that process will hopefully at least begin to take shape on Monday.
Commissioners will meet at 4 p.m. at the county courthouse in downtown Wilmington, 24 N. 3rd St. Room 301. You can find the complete meeting agenda here.
