Hardy supports merger strategy for BCMC

Published 7:51 pm Sunday, May 30, 2010

Staff Writer

The chairman of the board that’s debating the fate of Beaufort County Medical Center believes the hospital should affiliate with a large health-care provider — preferably Greenville-based University Health Systems of Eastern North Carolina.
“I would love to see us in a position where we can grow and thrive,” said Edwin M. “Sandy” Hardy, chairman of the Board of Commissioners of Beaufort Regional Health System, the hospital’s governing body. “To do that, I think we need to affiliate with a larger firm.”
Hardy, a lawyer who works primarily in Washington and Greenville, is a former legislator who briefly represented Beaufort County in the N.C. General Assembly. His father is Greenville neurosurgeon Ira Hardy.
In an interview Thursday, Hardy said that although he prefers to affiliate with the Greenville-based medical system, he remains open to offers from other health-care providers.
“We are unique in our connection to Greenville,” he said. “It would be an affiliation which I advocate.”
He also said that affiliation would bring higher wages and better benefits to hospital employees and that health care in Beaufort County would improve.
“Today, we can negotiate from a position of strength,” he said. “We’re stronger now than I think we will be at any time in the near future.
“I make no bones about it. I think it would be a tragedy if we tried to remain independent just for the sake of being independent,” he said.
Meanwhile, a group of eight doctors on the Beaufort County Medical Center staff has joined Hardy’s cause.
“(W)e conclude that the only reasonable and prudent action available to this Medical Center to avoid further financial losses and deterioration of the quality of health care provided is affiliation with a larger consolidated health care system that commands higher reimbursement, has deep economies of scale, and can assist with capital improvements,” the doctors wrote in a May 20 letter to Hardy and the Beaufort County Board of Commissioners.
The letter was signed by Thomas Penders, the hospital’s chief of staff, Rachel McCarter, vice chief of staff, and six other doctors, including outgoing hospital board member H.A. “Sandy” Easley. It was presented by Commissioner Jay McRoy at a recent commissioners’ budget workshop.
At that meeting, county leaders turned back a plan, advocated by McRoy, calling for a quick alignment by the hospital with a larger health-care provider. Instead they endorsed a proposal by Commissioner Hood Richardson that calls for cost-cutting measures to help the hospital remain independent and a more-studied approach to aligning with another health-care provider.
Hospital leaders are pursuing potential affiliates while also implementing budget cuts and seeking additional revenue in an effort to bolster hospital finances.
Some 30 potential partners — both nonprofit and for-profit businesses — have been contacted by letter to gauge their interest in additional discussions with the local hospital, said Bill Bedsole, Beaufort Regional Health System’s chief executive officer, in an interview Friday.
“Due to the challenges of the current economic environment and to achieve its governmental purpose of serving the health care needs of the community of Beaufort County, North Carolina, and surrounding areas (Beaufort Regional Health System) is evaluating certain strategic options regarding its future operations.
“One option under consideration is an arrangement whereby BRHS would lease its physical facilities to another hospital operator and such lessee would then assume future operational responsibilities for the hospital,” the letter reads.
It was sent by Daryl P. Johnson, a principal with HealthCare Appraisers Inc., the Florida consulting firm hired by the hospital’s board to lead the search for partners.
In the meantime, hospital officials are implementing a board-approved plan that could bring up to $6.725 million into hospital coffers through spending cuts, additional sources of revenue and loans during the next 18 months.
The plan was made public by McRoy at the recent budget workshop and explained by Bedsole on Friday.
Many of the proposed budget cuts — including a reduction in hospital staff, the closing of a surgery practice operated by Zack Waters and a reduction in clerical hours at Seaboard Surgical Associates — have been implemented. Others, such as the closing of the hospital’s coffee shop and the possible transition of Lifeline services to a private provider, are scheduled to be implemented over time, Bedsole said.
The hospital board, with help from the county, also is seeking to borrow $3 million, using buildings owned by the health system as collateral, in order to make the hospital’s upcoming $1.5 million debt payment to the county and put $1.5 million in reserves.
Hospital officials also hope to renegotiate the hospital’s contracts with insurance companies and implement more aggressive payment policies, among other options, to increase revenue by about $2.3 million, Bedsole said.
Those efforts likely will not be enough to ensure the future of the hospital, Hardy said.
“We’re not going to cut our way to prosperity,” he said.
Hardy said the 55-year-old hospital building needs several capital improvements, including a new emergency room and a restructuring of its intensive-care unit. And it faces major expenses in implementing a government-mandated electronic records system in coming years, he said.
“We need someone who can come in with capital and would commit to it,” he said.
Hospital consolidations are a growing state and national trend.
In North Carolina, UNC Health Care has purchased Rex Hospital and Chatham Hospital since 2000, when Duke University Health System bought Raleigh Community Hospital in 1998, renaming it Duke Raleigh Hospital. DUHS also holds the contract to manage Durham Regional Hospital. WakeMed Health &Hospitals manages Harnett Health System. University Health Systems of Eastern North Carolina has aligned itself in recent years with several hospitals, including Roanoke-Chowan, Chowan and Heritage hospitals. Hospitals in Duplin County and Henderson are seeking affiliates, according to published reports.
With the recent downturn in the economy, some officials fear that there may not be sufficient interest from other medical centers to pursue any type of affiliation agreement.
Politics could play a role in the hospital’s future, according to some officials.
Hardy and others have said that, currently, a majority of the hospital board appears to favor some type of merger agreement by a slim margin, but any changes in the composition of the board could change those numbers.
Because the hospital board leases its operations from the county, the county commissioners also will be called upon to approve any arrangement that affects that lease, County Manager Paul Spruill has said.
As in the case of the hospital board, the county commissioners, also appear divided over the hospital’s future, according to local leaders familiar with the issue.